10 Questions
What does an oligopoly refer to?
A market controlled by a few large sellers
What kind of products do oligopolistic markets usually have?
Homogeneous products
How do firms in oligopolistic markets influence prices?
By manipulating the supply function
What is a characteristic of firms in an oligopoly?
Mutual interdependence
What may oligopolies resort to in order to maximize profits?
Collusion
In an oligopolistic market, what can firms influence through manipulating the supply function?
Prices
What do firms in oligopolistic markets tend to resort to in order to maximize profits?
Collusion
What situation may lead to the development of oligopolies without collusion?
Fierce competition among market participants
What is a characteristic of products in oligopolistic markets?
Homogenous
Why are firms in an oligopoly mutually interdependent?
Any action by one firm is expected to affect other firms in the market
Study Notes
Oligopoly Definition
- An oligopoly refers to a market structure where a small number of firms compete with each other, and each firm has a significant influence on the market.
Characteristics of Oligopolistic Markets
- Oligopolistic markets usually have products that are either homogenous or differentiated.
- Firms in oligopolistic markets influence prices through strategic decision-making, as each firm's actions affect the others.
Firm Characteristics
- A characteristic of firms in an oligopoly is that they are mutually interdependent, meaning each firm's success depends on the actions of the other firms in the market.
Maximizing Profits
- To maximize profits, oligopolies may resort to collusion, such as price-fixing or output determination.
- Firms in oligopolistic markets tend to resort to non-price competition, such as advertising and product differentiation, in order to maximize profits.
- By manipulating the supply function, firms in oligopolistic markets can influence prices and output.
Development of Oligopolies
- A situation that may lead to the development of oligopolies without collusion is the presence of significant barriers to entry, which prevents new firms from entering the market.
Product Characteristics
- A characteristic of products in oligopolistic markets is that they are often branded and have distinct features that differentiate them from each other.
Test your knowledge of oligopoly markets and their characteristics with this quiz. Explore concepts such as market control, product homogeneity, and the impact of few large sellers on industry dynamics.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
