Consider Two Oligopolistic Industries Selling the Same Product in Different

question 140

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:

Central Route

A method of persuasion that entails thoughtful consideration of the arguments and content of a message.

Persuasive Messages

Communications designed to influence the attitudes, beliefs, or behaviors of the recipient through reasoning, appeal to emotion, or authority.

Local Election

The process of voting to select candidates for local offices within a municipality, region, or district, impacting community governance and policies.

Two-Sided Argument

A persuasive strategy that presents both the advantages and disadvantages of a particular argument or position.