Oligopoly

In 2007, five or six major pharmaceutical companies formed a group in order to control the price of vitamins and adjust their production. Such an arrangement is called a ________. Dominant strategy Duopoly Cartel Monopoly

Cartel

_______ arises when firms act together to reduce output and keep prices high. Oligopoly Cartel Monopoly

Cartel

________ arises when firms act together to reduce output and keep prices high. Oligopoly Cartel Monopoly

Cartel

Firms in an oligopoly typically acts more like ______. Competitors Business partners Shareholders

Competitors

How do oligopolies influence market inefficiencies? Deadweight loss for society is increased. The industry produces less output. The industry makes higher profits. Prices for these goods are artificially high.

Deadweight loss for society is increased. The industry produces less output. The industry makes higher profits. Prices for these goods are artificially high.

Which of the following are advantages that firms could gain by working together as if they were a monopoly? Firms can hold down industry output. Firms can increase industry productivity. Firms can charge a higher price.

Firms can hold down industry output. Firms can charge a higher price.

Mary and Raj are the only two growers who provide organically grown corn to a local grocery store. They know that if they cooperated and produced less corn, they could raise the price of the corn. If they work independently, they will each earn $100. If they decide to work together and both lower their output, they can each earn $150. If one person lowers output and the other does not, the person who lowers output will earn $0 and the other person will capture the entire market and will earn $200. The table represents the choices available to Mary and Raj. What is the best choice for Raj if he is sure that Mary will cooperate? Mary Keeps ProducingMary Lowers OutputRaj Keeps Producing$100, $100$200, $0Raj Lowers Output$0, $200$150, $150

If Raj is sure Mary will cooperate, he should cheat.

For which of the following reason(s) are oligopolies inefficient? They may lack incentives to provide innovative products and high-quality service​. Typically they do not produce at the minimum of their average cost curves. ​ Barriers to entry can allow them to earn sustained profits over long periods of time​.

They may lack incentives to provide innovative products and high-quality service​. Typically they do not produce at the minimum of their average cost curves.

For which of the following reason(s) are oligopolies inefficient? ​Barriers to entry can allow them to earn sustained profits over long periods of time​. Typically they do not produce at the minimum of their average cost curves. They may lack incentives to provide innovative products and high-quality service​.

Typically they do not produce at the minimum of their average cost curves. They may lack incentives to provide innovative products and high-quality service​.

Saudi Arabia, Venezuela, Qatar and others, are members of OPEC, which is best described as which of the following? an oligopoly a monopoly a cartel

a cartel

In the framework of an oligopoly, what strategy can work like a silent form of cooperation? immediately match price increases always match other cartel firms' price increases, but don't match price cuts legally enforceable agreements always match other cartel firms' price cuts, but don't match price increases

always match other cartel firms' price cuts, but don't match price increases

In the framework of an oligopoly, what strategy can work like a silent form of cooperation? legally enforceable agreements always match other cartel firms' price cuts, but don't match price increases always match other cartel firms' price increases, but don't match price cuts immediately match price increases

always match other cartel firms' price cuts, but don't match price increases

Firms in an oligopoly typically act more like ________. competitors business partners shareholders

competitors

Firms in an oligopoly typically act more like ________. shareholders business partners competitors

competitors

In a prisoner's dilemma, what type of behavior provides the most benefit for each individual? remain silent confess cooperate

confess

Sometimes oligopolies in the same industry are very different in size. Suppose we have a duopoly where one firm (Firm A) is large and the other firm (Firm B) is small, as shown in the prisoner's dilemma box: What is Firm B's most likely choice? Firm B colludes with Firm AFirm B cheats by selling more outputFirm A colludes with Firm BA gets $1,000,B gets $100A gets $800,B gets $200Firm A cheats by selling more outputA gets $1,050,B gets $50A gets $500,B gets $2 cooperate with Firm A work independently cheat

cooperate with Firm A

Which of the following refers to firms' ability to make the same pricing decisions without consulting each other? malfeasance implicit collusion price fixing

implicit collusion

Which of the following refers to firms' ability to make the same pricing decisions without consulting each other? malfeasance price fixing implicit collusion

implicit collusion

Firms in an oligopoly often: face perfectly elastic demand curves. make decisions based on the behavior or expected behavior of their competitors. have no incentive to collude.

make decisions based on the behavior or expected behavior of their competitors.

Firms in an oligopoly often: have no incentive to collude. make decisions based on the behavior or expected behavior of their competitors. face perfectly elastic demand curves.

make decisions based on the behavior or expected behavior of their competitors.

Suppose circumstances have allowed several large firms to have all or most of the sales in an industry. Which of the following may be happening? oligopoly cartel perfect competition

oligopoly cartel

In some cases oligopolies can benefit society by: earning abnormal profits. raising prices and reducing output. taking advantage of scale economies to produce at low average cost.

taking advantage of scale economies to produce at low average cost.

Oligopolistic markets: are usually thought of as the most efficient market structures. typically have higher barriers to entry. are characterized as having a small number of sellers.

typically have higher barriers to entry. are characterized as having a small number of sellers.