[Solved] Which of the Following Statements Is Correct About Oligopoly Firms

If we assume that price leadership prevails in a particular industry,what might prevent the leader from announcing a dramatic increase in the price of the product sold? A)The fear that the AC of the other firms within the industry would decrease. B)The fear that new firms would be tempted to enter the industry. C)The fear that one of the other firms would break ranks and increase their price even more. D)The fear that such action would provide proof that the firms are engaged in overt collusion.

All of the following,except one,could be an explanation of a price war between firms.Which is the exception? A)A breakdown in the collusive agreement between firms. B)The intense competition that one finds in a perfectly competitive industry. C)An aggressive young firm challenging the established price leadership of a rival firm. D)The action taken by established firms to ward off the possible entry of a new firm.

All,except one,of the following statements are valid arguments in favour of advertising.Which one is the exception? A)Advertising provides consumers with information. B)Advertising reduces the search time needed by consumers to acquire products. C)Advertising increases the barriers to entry into an industry and thereby enhances competition. D)Advertising can lower the prices of products by reducing the firms' average cost through increased output levels. E)Advertising increases the availability of radio and television program choices for the consumer.

-Refer to Figure 11.10 to answer this question.What output level will the firm produce? A)Q₁. B)Q₂. C)Q₃. D)Q₄. E)More information is needed to answer this question.

-Refer to Figure 11.10 to answer this question.What price will the firm charge? A)P₁. B)P₂. C)P₃. D)P₄.

All of the following statements,except one,are valid statements regarding barriers to entry and the existence of large profits in an oligopoly industry.Which statement is not valid? A)Barriers to entry enable firms to spend large sums on research that can then be recovered in future sales. B)Barriers to entry lead to lower profits. C)The large profits enable firms to finance the development of new technology. D)The barriers to entry help maintain large-size firms within the industry,which enhances the ability of these firms to capture economies of scale. E)The barriers to entry increase the prospect of downward shifts in the short-run average cost curves.

All of the following statements,except one,are correct about a firm operating under conditions of either monopolistic competition or oligopoly.Which is the exception? A)Graphically,it faces a downward-sloping demand curve. B)It charges a price above marginal cost in both the short run and the long run. C)It charges a price equal to average cost in both the short run and the long run. D)It fails to achieve economic efficiency. E)It fails to achieve productive efficiency.

Imperfect competition is characterized by firms competing on price.

One characteristic of monopolistic competition is the existence of many firms operating in the same industry.

Monopolistically-competitive firms typically make economic profits in the long run.