Consider Two Oligopolistic Industries Selling the Same Product in Different

question 182

Multiple Choice

Consider two oligopolistic industries selling the same product in different locations.In the first industry,firms always match price changes by any other firm in the industry.In the second industry,firms always ignore price changes by any other firm.which of the following statements is true about these two industries,holding everything else constant?

• A) Market prices are likely to be higher in the first industry in which firms always match price changes by rival firms than in the second where firms ignore their rivals' price changes.
• B) Market prices are likely to be lower in the first industry where firms always match price changes by rival firms than in the second where firms ignore their rivals' price changes.
• C) Market prices are likely to be the same in both markets because they are both oligopolistic markets.
• D) No conclusions can be drawn about the pricing behavior under these very different firm behaviors.

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Definitions:

Dollar Sales

The total revenue generated from the sale of goods or services, calculated in dollar terms.

Break-Even

A financial situation in a business where the income equals the costs, leading to neither profit nor loss.

Monthly

Pertaining to something that occurs, is calculated, or reported every month.

Variable Expense

An expense that changes in proportion to production output or sales.