Question

In: Economics

1. Which of the following industries is the best example of an oligopoly? A. Corn production...

1. Which of the following industries is the best example of an oligopoly?

A. Corn production

B. Automobile production in the United States

D. Production of t-shirts

C. Pizzerias in New York City

2. Oligopolistic firms have a special constraint, not faced by other types of firm. What is it?

A. Demand

B. The reaction of rival firms

C. Costs

D. The need to play games

3. Of the following markets, which is most likely to have contestable markets

A. Nuclear power generation

B. Trucking

C. Dentistry

D. Automobile manufacturing

4. Market coordination is easier with which of the following?

A. Many smaller firms

B. A few firms of same size

C. One large and many small firms

D. More than four firms

5. Oligopolistic interdependence is the need to do which of the following?

A. Pay close attention to the actions of rival firms

B. Pay attention to the actions of the government

C. Pay attention to their internal costs

D. Pay attention to their inputs

Solutions

Expert Solution

Answer: 1: B. Automobile production in the United States

Oligopoly is the market situation with few firms. Few firms are competing in the market in production of automobile.

Answer 2: B. The reaction of rival firms

There are few firm in the oligopoly market and they are interdependent on each other for their price and quantity decisions. So under oligopoly firms have to keep close eye on the reaction of their rival firms

Answer:3: B. Trucking

Contestable market means firms can easily enter and exit the market. Nuclear power generation, automobile manufacturing and dentistry they need higher level of skills, technology etc so it is not easy for firms to enter in these markets also cost is very high but for trucking firm it is easy to enter the market

Answer: 4: B. a few firms of same size

Few firms with same size or almost same market share it easy for them to coordinate with each other to set the price and output in the market

Answer: 5: A. pay close attention to the actions of rival firms

Oligopoly firms are interdependent so they have to closely observe the actions of their rival firms as their market decision is affected by the policies of rivals

Rahul Sunny answered 1 year ago

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