3.5.5 Oligopoly

• A small number of firms control a significant portion of the market in an oligopoly.


  True
• What is interdependence in an oligopoly?

  Each firm's decisions affect others
• Which industry is an example of an oligopoly?

  Mobile network industry
• Match the market structure with its key characteristics:

  Oligopoly ↔️ Small number of firms

  Perfect Competition ↔️ Many firms and low barriers

  Monopoly ↔️ One firm and high barriers
• High barriers to entry make it difficult for new firms to enter
• What types of products may firms in an oligopoly sell?

  Homogeneous or differentiated
• How does interdependence in an oligopoly affect firm behavior?

  Firms monitor each other
• What is the interdependence characteristic of an oligopoly?

  Each firm's decisions affect others
• Why are high barriers to entry a key characteristic of oligopolies?

  They limit new competition
• Product differentiation in an oligopoly can lead to competition through branding and advertising
• Match the market structure with its barriers to entry:

  Oligopoly ↔️ High barriers

  Perfect Competition ↔️ Low barriers

  Monopoly ↔️ Very high barriers
• Which industry exemplifies an oligopoly due to its few major companies?

  Mobile network industry
• Which major carriers control the commercial airline industry?

  American, Delta, United, Southwest
• High barriers to entry are a characteristic of an oligopoly.


  True
• In an oligopoly, firms often compete through non-price strategies like branding and advertising
• What is the product differentiation characteristic of an oligopoly?

  Products may be homogeneous or differentiated
• Match the industry with its market structure and characteristics:

  Automobile ↔️ Oligopoly: Small number of firms, high barriers to entry

  Wheat ↔️ Perfect Competition: Many firms, low barriers to entry

  Restaurants ↔️ Monopolistic Competition: Many firms, low barriers to entry
• Tacit collusion involves informal understanding without direct communication
• What is a disadvantage of explicit collusion among firms?

  It is illegal
• Tacit collusion avoids legal issues and maintains industry stability.


  True
• Non-collusive behavior involves strategic competition without direct agreements
• Firms in an oligopoly can engage in both collusive and non-collusive behaviors.

  True
• What is an advantage of explicit collusion?

  Ensures stable prices
• What does the kinked demand curve explain about firm behavior in an oligopoly?

  Price rigidity
• Match the collusion type with its corresponding non-collusive strategy:

  Explicit Collusion ↔️ Price Leadership

  Tacit Collusion ↔️ Kinked Demand Curve
• Which organization is an example of explicit collusion?

  OPEC
• What is the primary characteristic of an oligopoly market structure?

  Small number of firms
• In an oligopoly, each firm's decisions affect the other firms.


  True
• Which industry is an example of an oligopoly?

  Mobile network industry
• High startup costs are a barrier to entry in oligopolistic markets.

  True
• The automobile industry is an example of an industry with oligopolistic characteristics
• Match the market structure with its key characteristics:

  Perfect Competition ↔️ Many firms, low barriers

  Monopoly ↔️ One firm, high barriers

  Monopolistic Competition ↔️ Many firms, low interdependence
• Explicit collusion involves formal agreements among firms to fix prices or output.


  True
• What is price leadership in an oligopoly?

  One firm sets prices
• Explicit collusion is often illegal as it reduces competition.


  True
• The kinked demand curve explains why firms in an oligopoly hesitate to raise prices
• Prices in an oligopoly tend to be relatively stable due to interdependence and collusion
• What is an oligopoly?

  A market with few firms
• High barriers to entry in an oligopoly make it difficult for new firms to enter
• Products in an oligopoly may be either homogeneous or differentiated.


  True