oligopoly

• What is a key assumption of oligopoly markets?

  Few firms dominate the market
• What does strategic interdependence in oligopoly imply?

  Firms consider rivals' future actions
• What are barriers to entry in oligopoly?

  Obstacles preventing new firms from entering
• How do economies of scale affect oligopoly firms?

  They benefit firms by reducing costs
• What is the kinked demand curve associated with?

  Price rigidity in oligopoly markets
• What happens to price in a kinked demand curve model?

  Price changes lead to small demand changes
• How do firms react to price cuts and increases in oligopoly?

  They behave differently to price changes
• What is the net effect of price competition in oligopoly?

  It can lead to a price war
• What is a characteristic of collusion in oligopoly?

  Companies coordinate to set prices
• What is price rigidity in oligopoly?

  Prices remain stable despite changes in demand
• What is the impact of a price war on market share?

  It can reduce profits for all firms
• What are the types of collusion in oligopoly?

  Covert and overt collusion
• What is the purpose of price fixing in collusion?

  To maximize profits among firms
• How does a cartel operate in an oligopoly?

  Firms agree to limit production and set prices
• What is the consequence of breaking a collusion agreement?

  It can lead to price competition and instability
• What is the relationship between marginal cost (MC) and average cost (AC) in profit maximization?

  MC equals AC at profit maximization
• What happens to prices when demand increases in an oligopoly?

  Prices may rise due to increased demand
• How can firms maintain market share in an oligopoly?

  By engaging in non-price competition
• What is the effect of price discrimination in oligopoly?

  It can lead to higher profits for firms
• What is the definition of supernormal profit?

  Profit exceeding normal profit levels
• What is the significance of output guarantees in oligopoly?

  They ensure firms meet production targets
• How does demand elasticity affect pricing strategies in oligopoly?

  Higher elasticity leads to more competitive pricing
• What is the role of market share in oligopoly competition?

  It determines firms' pricing power and strategies
• What is the impact of illegal price fixing?

  It is against competition laws
• How does collusion affect consumer prices?

  It typically leads to higher prices for consumers
• What happens when firms engage in price wars?

  They may reduce prices to unsustainable levels
• What is the significance of price elasticity in oligopoly markets?

  It influences firms' pricing and output decisions
• What is the definition of a monopoly?

  A market dominated by a single firm
• How does a firm become a monopoly?

  By gaining significant market power and control
• What is the relationship between collusion and market power?

  Collusion increases market power among firms
• What is the impact of consumer demand on oligopoly pricing?

  It directly influences pricing strategies
• What is the primary goal of firms in an oligopoly?

  To maximize profits while maintaining market share
• How does the concept of price rigidity relate to oligopoly behavior?

  Firms avoid changing prices frequently
• What are the consequences of a firm breaking a collusion agreement?

  It can lead to competitive pricing and instability
• What is the significance of market share in oligopoly pricing strategies?

  It affects firms' ability to set prices
• What is the definition of price discrimination?

  Charging different prices to different consumers
• How does price discrimination benefit firms?

  It allows firms to maximize revenue
• What is the relationship between demand elasticity and pricing strategies?

  Higher elasticity leads to more competitive pricing
• What is the role of non-price competition in oligopoly?

  It helps firms differentiate their products
• What is the definition of a cartel?

  An agreement between firms to limit competition