Oligopoly ECON 1 Quiz

An industry that is dominated by a few large firms is 

• monopolistic competition.
• a monopoly.
• perfect competition.
• an oligopoly.

conspiring among business to set the prices of competing production

• pricing fixing
• trust
• market share
• oligopoly

This is an illegal practice of an oligopoly working together to set prices. 

• collusion 
• monopolistic competition 
• competitive pricing
• priceline negotiation 

The most recognizable form of non-price competition is? 

• More Locations 
• Better Customer Service
• Advertising 
• Low Price 

Which of the following usually results from colluding firms? 

• more is produced
• profit decreases
• prices are higher
• more firms enter the market

The characteristic of oligopolistic firms that makes them different from all other types of firms is that oligopolistic firms:

• Advertise their products
• Consider each other's decisions
• Produce differentiated products
• Face high barriers to entry

The goal of a company in an oligopoly industry is to

• Increase market share and profits.

• Obtain the highest price possible.

• Always follow rivals if they raise price.

• Be the market leader in innovation.

A kinked demand curve indicates that rival oligopolists match all

• Increased advertising.

• Advertising reductions.

• Price increases.

• Price reductions.

The study of how decisions are made when strategic interaction between firms exists is known as

• Game theory.

• Contestable market theory.

• Market power theory.

• Predatory pricing theory.

The following table shows the profits associated with the pricing strategies of two oligopolistic firms, Agronomia and Farmingdale. Each firm has two possible strategies: to charge a low price or a high price. The first entry in each cell shows the profits to Agronomia and the second the profits to Farmingdale. If the two firms do not cooperate, what will be the profit for each firm?

• Agronomia = $50; Farmingdale = $100
• Agronomia = $150; Farmingdale = $150
• Agronomia = $300; Farmindale = $50
• Agronomia = $100; Farmingdale = $100