Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Textbook Question
Chapter 18, Problem 1MCQ
Which of the following statements is incorrect. In oligopoly, ____________ .
A. barriers to entry prevent new firms entering
B. each firm’s profit is influenced by each other firms’ advertising
C. each firm’s action is influenced by the actions and reactions of each other firm
D. each firm is a price taker and the price is the
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Students have asked these similar questions
a) Using the following graph state the price and quantity the firm will be at if the oligopoly
market is competitive and in long run equilibrium. Explain why the firm will be at that price and
quantity.
MC
ATC
1 E
10
20
30
40
50
60
70
80
Quantity
b) Using the same graph explain what the price and quantity would be if the market formed a
cartel. Explain the cartel and how it works, and why firms form them.
Price and Cost (dollars)
What is the market structure that best suits the above firm?
PRICE (Dollars)
22
10
10
ATC
20 30 40 60 60 70 80 90 100
QUANTITY (Units)
a. Perfect competition
b. Natural monopoly
c. Oligopoly
d. None of the above.
K
Which of the following statements is incorrect? In oligopoly
www
A. each firm's action is influenced by the actions and reactions of each other firm
OB. barriers to entry prevent new firms entering
OC. each firm is a price taker and the price is the monopoly profit-maximizing price
OD. each firm's profit is influenced by each other firms' advertising
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Chapter 18 Solutions
Foundations of Economics (8th Edition)
Ch. 18 - Prob. 1SPPACh. 18 - Prob. 2SPPACh. 18 - Prob. 3SPPACh. 18 - Prob. 4SPPACh. 18 - Prob. 5SPPACh. 18 - Prob. 6SPPACh. 18 - Prob. 7SPPACh. 18 - Prob. 8SPPACh. 18 - Prob. 1IAPACh. 18 - Prob. 2IAPA
Ch. 18 - Prob. 3IAPACh. 18 - Prob. 4IAPACh. 18 - Use this information to work Problems 5 to 7. DOJ...Ch. 18 - Use this information to work Problems 5 to 7. DOJ...Ch. 18 - Prob. 7IAPACh. 18 - Which of the following statements is incorrect. In...Ch. 18 - If firms in oligopoly form a cartel, it will...Ch. 18 - Prob. 3MCQCh. 18 - Prob. 4MCQCh. 18 - Prob. 5MCQCh. 18 - Prob. 6MCQCh. 18 - Prob. 7MCQ
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- An oligopolistic firm having lower costs than the other firms sets a lower price which the other firms have to follow. a. barometric price leadership b. stackelberg oligopoly c. price leadership by a low-cot firm d. price leadership by dominant firmarrow_forwardQuestion 20 In the market for a brand name medicine with a single company selling the medicine, that company is a_______Eventually, the government lets other companies sell the medicine as a "generic" alternative to the brand name. The effect of this increased competition is to_______ the medicine's price.O. monopoly, decreaseO. oligopoly, decreaseO. monopoly, increaseO. oligopoly, increasearrow_forwardWhich of the following would most likely create the setting for an Oligopoly ? A. The government grants T'Challa and Nakia a patent for their respective vibranium-based electric car batteries. B. Market Demand is two or more times less than the quantity needed to produce at the minimum of the Average Cost Curve. C. Market Demand is two or more times greater than the quantity needed to produce at the minimum of the Marginal Cost Curve. D. Insumountable technological difficulty associated with producing similar products serves as an effective Barrier to Entry. E. All of the Abovearrow_forward
- An oligopoly takes into account the decisions made by other companies before lowering its price.. true or falsearrow_forwardDiscuss the major barriers to entry into an industry. Explain how each barrier can foster either monopoly or oligopoly. Which barriers, if any, do you feel give rise to monopoly that is socially justifiable?arrow_forwardWhat is the primary strategy used by firms in oligopolistic markets to maximize profits?A. Price competitionB. Quantity competitionC. CollusionD. Non-price competitionarrow_forward
- 1. Write a sentence or two defining the following terms in your own words. Give examples of each. s. Oligopoly t. Induced u. Inelastic Demandarrow_forwardWhich of the following is a feature of an oligopoly? a. group behavior among firms b. firms that are all similar in size c. low barriers to entry d. highly flexible pricingarrow_forward1. If Sam and Jack each produce the same quantity of appointments as would be produced in perfect competition, the total quantity of appointments is ___ the price per lesson would be ____ , and the economic profit of Sam and Jack would be____? 2. If Sam and Jack form a cartel and produce the same quantity of appointments as would be produced in a monopoly, the total quantity of appointments would be ____, the price per appointment is ____ and the economic profit of Sam and Jack is ____? 3. Would Sam and Jack have an incentive to break the cartel agreement and lower their price to increase the number of tennis lesson appointments?arrow_forward
- Question 1a. With the aid of a diagram explain how a monopolist determines how muchoutput to produce and what price to charge. [4 marks]b. Explain how the perfectly competitive firm decides whether to operate or shutdown in the short run. [4 marks]c. Explain why firms operating in monopolistically competitive markets probablywill not earn an economic profit in the long run. [4 marks]d. Why does interdependence of firms play a major role in oligopoly but not inperfect competition or monopolistic competition? [4 marks]arrow_forwardWhat are the number of firms in a oligopoly and what is the price control of product by individual firms.arrow_forwardWhich of the following is not true about oligopoly? A. there are few sellers B. profit is higher if there is collusion C. collusion is always subject to threat of a member violating the collusive agreement D. a cartel is an official organization of oil exporting countries which aims to maximize the profits for the group E. all are truearrow_forward
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