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Economics

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Bethel Grady

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โˆ™ 2021-10-09 18:34:33
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Cards in this guide (24)
What is an oligopoly

An oligopoly is an economic condition in which there are so few independent suppliers of a particular product that competitive pricing does not take place. Oligopoly is a form of market where there is domination of a limited number of suppliers and sellers called Oligopolists. A situation in which a particular market is controlled by a small group of firms.

An oligopoly is much like a monopoly, in which only one company exerts control over most of a market. In an oligopoly, there are at least two firms controlling the market. An oligopoly is a market dominated by a few large suppliers. The degree of market concentration is very high. Firms within an oligopoly produce branded products and there are also barriers to entry. Another important characteristic of an oligopoly is interdependence between firms. This means that each firm must take into account the likely reactions of other firms in the market when making pricing and investment decisions. This creates uncertainty in such markets - which economists seek to model through the use of game theory. The retail gas market is a good example of an oligopoly because a small number of firms control a large majority of the market. Economics is much like a game in which the players anticipate one another's moves. Game theory can also be applied in this situations as if decision makers must take into account the reasoning of other decision makers. It has been used, for example, to determine the formation of political coalitions or business conglomerates, the optimum price at which to sell products or services, the best site for a manufacturing plant, and even the behavior of certain species in the struggle for survival.

The ongoing interdependence between businesses can lead to implicit and explicit collusion between the major firms in the market. Collusion occurs when businesses agree to act as if they were in a monopoly position. KEY FEATURES OF OLIGOPOLY - A few firms selling similar product - Each firm produces branded products - Likely to be significant entry barriers into the market in the long run which allows firms to make supernormal profits. - Interdependence between competing firms. Businesses have to take into account likely reactions of rivals to any change in price and output THEORIES ABOUT OLIGOPOLY PRICING There are four major theories about oligopoly pricing: (1) Oligopoly firms collaborate to charge the monopoly price and get monopoly profits (2) Oligopoly firms compete on price so that price and profits will be the same as a competitive industry (3) Oligopoly price and profits will be between the monopoly and competitive ends of the scale (4) Oligopoly prices and profits are "indeterminate" because of the difficulties in modelling interdependent price and output decisions Distinct features of an oligopolistic market: - An oligopolistic market comprises a handful of firms, engaged in selling analogous products - All oligopolistic markets increase mutual dependence among the firms involved in similar competition. It also prepares businessmen to accept the outcomes arising from rivalries with respect to alterations in the production and prices of goods. - In near future, an oligopolistic market is likely to impose restrictions on admission, in an attempt to incur abnormal profits. - Each of the business houses involved with this market produces branded goods THE IMPORTANCE OF PRICE AND NON-PRICE COMPETITION Firms compete for market share and the demand from consumers in lots of ways. We make an important distinction between price competition and non-price competition. Price competition can involve discounting the price of a product (or a range of products) to increase demand. Non-price competition focuses on other strategies for increasing market share. Consider the example of the highly competitive UK supermarket industry where non-price competition has become very important in the battle for sales - Mass media advertising and marketing - Store Loyalty cards - Banking and other Financial Services (including travel insurance) - In-store chemists / post offices / creches - Home delivery systems - Discounted petrol at hyper-markets - Extension of opening hours (24 hour shopping in many stores) - Innovative use of technology for shoppers including self-scanning machines - Financial incentives to shop at off-peak times - Internet shopping for customers Price leadership: Oligopolistic market The dominance of one firm in the oligopolistic market results in price leadership. Firms having less market shares only follow the prices fixed by leaders. Oligopolistic competition: Effects - Oligopolistic competition in most cases leads to collaboration of the business firms on issues like raising the prices of various goods and subdue production process. - Under other given market conditions, the competition between the sellers acquires a violent form, on the grounds of lowering the prices and increasing the production. - Collaboration of various firms also brings about stabilization in the unsteady markets. PRICE LEADERSHIP IN OLIGOPOLISTIC MARKETS When one firm has a dominant position in the market the oligopoly may experience price leadership. The firms with lower market shares may simply follow the pricing changes prompted by the dominant firms. We see examples of this with the major mortgage lenders and petrol retailers. In reality, it is the Oligopoly market which exists, having a high degree of market concentration. This indicates that a huge percentage of the Oligopoly market is occupied by the leading commercial firms of a country. These firms require strategic planning to consider the reactions of other participants existing in the market. This is precisely why an oligopolistic market is subject to greater risk of connivances.
By: Schafaq Chohan
An oligopoly is a market form in which a market or industry is dominated by a small number of sellers. Barriers to entry are high.

What is a supply curve

a graph of the quantity supplied of a good at different prices.

What is equilibrium

Equilibrium is

* a stable situation in which forces cancel one another

* chemical equilibrium: a chemical reaction and its reverse proceed at equal rates

* balance: equality of distribution

* a sensory system located in structures of the inner ear that registers the orientation of the head

What signals do high prices send to producers and consumers

I asked this question why does nobody know this please help me ):<

Why does the government sometimes give monopoly power to a company by issuing a patent

The company can then profit from their research without competition.

How do falling prices affect supply

The quantity demanded rises.

Explanation: The lower a prize becomes the more people will want to buy that certain good no matter what the good may be.
Falling prices discourage suppliers because of dwindling profits and when suppliers shy away, shortage arises as well.

What happens when the supply of a nonperishable good is greater than the consumer wants to buy

Either the price drops until the consumers are prepared to buy more, or supplier are left holding surplus stocks until replacement purchases clear these inventories.

No manufactured good is truly non-perishable, and so will eventually require replacement.

On which kinds of goods do governments generally place price ceilings

On those that are essential, but are too expensive for such consumers. One example is when a price ceiling was put into effect on New York apartment rent prices.

What is an example that displays the law of supply

An example of the Law of Supply is:

The price of an object increased, so the quantity supplied of that object also increased.

Why do economist regard imperfect competition as undesirable

Imperfect competition is viewed by economists as undesirable because it is thought it places unnecessary and unwelcome constraints on the natural economic forces. An example of imperfect competition is a monopoly.

Which of these is most likely to lead directly to a black market

Rationing

What will always cause a supply curve to shift to the left

advaces in tec

What is an exception to the general idea that markets lead to an efficient allocation of resources

Imperfect Compitition

What are the three practices of oligopolies that concern the government the most

Price Fixing, Collusion, And Cartels

The physical capital used by a woodworker to make furniture would include

saws and drills

What do you have when the actual price in a market is below the equilibrium price

Excess Supply

Which of these companies has NOT been forced to split up by the federal government Microsoft AT and T American Tobacco Company Standard Oil Trust

Microsoft.

Which of the following is the situation that makes the market behave inefficiently

Its when consumers do not have enough info to make good choices .....:) hope this helps!

Which of the following is true about a firm with a natural monopoly

It ususally agrees to allow the government to control the price and service provided.

What does it mean when a market is in equilibrium

it means that the market is stable

What kind of goods require search costs

its when you have to call in a team for a covity search, that costs alot of money

When was Advantage Rent a Car created

Advantage Rent a Car was created in 1963.

If automobile workers went on strike causing a decreased supply of cars the supply curve would shift inward to the left and

there would be an eventual upward movement along the demand curve, reestablishing equilibrium

A system of allocating scarce goods and services using criteria other than price is .

A system of allocating scarce goods and services using criteria other than price is _____.

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