Microeconomics: Private and Public Choice (MindTap Course List)
15th Edition
ISBN: 9781285453569
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 11, Problem 8CQ
To determine
Explain the oligopolistic collusion.
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Why does price leadership sometimes evolve in oligopolistic markets?
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Microeconomics: Private and Public Choice (MindTap Course List)
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- How is an oligopoly market different from monopolistically competitive market in respect of price and output determination?arrow_forwardIf a market structure is an oligopoly, do Lexus, Cadillac, and Lincoln engage in sticky pricing? Who is the market leader?arrow_forwardWhat is the characteristics of oligopoly. Please explainarrow_forward
- why is Commercial air travel an example of oligopoly?arrow_forwardWhat are the incentives for firms in an oligopoly to collude or work together? Has price collusion happened in the past?arrow_forwardWhat is a characteristic of an oligopoly? Group of answer choices Easy entry and exit One firm Many, small firms Some barriers to entryarrow_forward
- What are the major characteristics of a firm competing under conditions of monopolistic competition? What are the major characteristics of a firm competing under conditions of oligopoly? Why does the movie theater charge matinee customers a lower price than the night time customers? Why is there an increased incentive for collusion among oligopoly firms?arrow_forwardThe French economist Antoine Cournot developed an interesting model of competition in an oligopoly that now bears his name. In a Cournot oligopoly, all of the firms know that the total output from all firms will determine the price (based on the downward-sloping market demand curve), but they make independent and simultaneous decisions about how much output to produce. Cournot developed this model after observing how a spring water duopoly (two firms) behaved. So let’s look at a duopoly example.For each firm to decide how much to produce, it must make a guess about how much the other firm is going to produce. Also, the firms basically assume that once the other firm has decided how much to produce, it can’t really change its decision.Here’s an example. Suppose the market demand curve for gallons of fresh spring water looks like the one below and, to keep things simple, the marginal cost of spring water is zero. If Firm X believes that Firm Y is going to produce 100 gallons of spring…arrow_forwardWhat characterizes a market structure known as Oligopoly? How does Oligopoly is both similar to and different from Pure Monopoly?arrow_forward
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