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10 Cards in this Set
- Front
- Back
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How do oligopolies maximize their profits?
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By forming a cartel and acting as a monopoly
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Do oligopolies have Market Power?
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Yes, but not as much as a monopoly
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Define Oligopoly:
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a market structure in which only a few sellers offer similar or identical products
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Define concentration ratio:
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A percentage of total output in the market supplied by the four largest firms. In the U.S. economy, most industries have a four-firm concentration ratio under 50%.
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What is a key feature of an oligopoly?
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the tension between cooperation and self-interest
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Do oligopolies produce small quantities at a price lower than marginal cost?
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No, they are able to charge more than the marginal cost of production.
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How many firms are in a Duopoly?
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2
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Define Collusion:
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an agreement among firms in a market about quantities to produce or prices to charge
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Define Cartel:
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a group of firms acting in unison
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True or False....Cartels allow the market to determine the split in production amongst firms?
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False, cartels determine this value prior to producing in order to maximize profits.
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