Oligopoly Flashcards
1
Q
Oligopoly
A
A market that is dominated by a few firms between whom there is conscious interdependence.
2
Q
Conscious interdependence
A
Each firm is affected by the decision of all of the other firms and that they are aware of this fact
3
Q
One firm increases its price, the other firms in the industry would keep prices the same
A
Firm that changed price can’t compete. Demand is price elastic as there will be a more than proportionate decrease in quantity demanded
4
Q
If a firm were to cut its price. Rival would likely do the same.
A
Firms will maintain market share.
The quantity demanded for the good will increase less than proportionatel.
Profitability for all firms will be hit.
