MICRO - imperfect competition

Question 1

what is an oligopoly characterised by

Answer 1

• market dominated by a few firms
• high level of market concentration
• each firm produces branded/differentiated products (heterogenous)
• entry barriers exist, long run supernormal profits possible
• intensive non-price competition
• price rigidity/stability

Question 2

what is concentration ratio

Answer 2

measure of the degree of concentration in a market, expressed as a %. Numerical measure of the relative size of firms related to the industry as a whole, combined market share of top firms

Question 3

what is price rigidity

Answer 3

oligopolistic markets tend to have stable prices due to interdependence in markets

Question 4

what is a collusive oligopoly

Answer 4

when several large firms in an industry act to restrict price or output or share out the market

Question 5

what is:
duopoly
duopsony

Answer 5

DUOPOLY = market dominated by two rival firms
DUOPSONY = two major buyers of a good or service in a market