Oligopoly

Question 1

Define oligopoly.

Answer 1

A market structure dominated by a few large firms, leading to limited competition.

Question 2

True or false: Oligopolies have many small firms competing.

Answer 2

FALSE

Oligopolies are characterized by few dominant firms, unlike perfect competition.

Question 3

What is collusion in an oligopoly?

Answer 3

An agreement among firms to limit competition and set prices.

Question 4

Fill in the blank: Price leadership is often seen in _______ markets.

Answer 4

oligopoly

Question 5

What is a kinked demand curve?

Answer 5

A model showing price rigidity in oligopolistic markets due to competitor reactions.

Question 6

Define barriers to entry.

Answer 6

Obstacles that prevent new competitors from easily entering an industry.

Question 7

True or false: Oligopolies can lead to higher prices for consumers.

Answer 7

TRUE

Firms may collude to set higher prices than in competitive markets.

Question 8

What is non-price competition?

Answer 8

Strategies used by firms to attract customers without changing prices.

Question 9

Fill in the blank: Game theory analyzes strategic interactions among _______ in oligopolies.

Answer 9

firms

Question 10

What is price war?

Answer 10

A competitive exchange among rival companies to lower prices, often unsustainable.

Question 11

Define market share.

Answer 11

The portion of a market controlled by a particular company or product.

Question 12

True or false: Oligopolies always result in efficient market outcomes.

Answer 12

FALSE

Oligopolies can lead to inefficiencies and higher prices compared to perfect competition.

Question 13

What is cartel?

Answer 13

A formal agreement among competing firms to control prices and limit production.

Question 14

Fill in the blank: Product differentiation is key in _______ markets.

Answer 14

oligopoly

Question 15

What is the Herfindahl-Hirschman Index?

Answer 15

A measure of market concentration used to assess the level of competition.