Why is there emphasis on non price competition in oligopoly?
What will be an ideal response?
The reasons stem from two basic facts. First, non price competition is less likely to get out of hand than is price competition. Price competition among monopolists can lead to costly price wars because any price change can be easily matched by a rival firm. Non price competition is less easy to duplicate and may give an oligopoly a temporary or permanent advantage over a rival. The areas for non price competition might entail product changes, improved production or services, or advertising campaigns. Second, oligopolies have greater financial resources to invest in non price competition in such areas as product development or advertising. Oligopolists have more resources than monopolistic competitors to engage in this type of competition for long periods of time.
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Brett buys a new cell phone for $100. He receives consumer surplus of $80 from the purchase. How much does Brett value his cell phone?
A) $180 B) $100 C) $80 D) $20
We can represent the entry of new firms into a monopolistically competitive market by shifting the existing firms':
a. demand curves downward. b. demand curves upward. c. demand curves more inelastic. d. cost curves upward. e. cost curves downward.
The government raises gasoline taxes as part of the price of gasoline and receives more tax revenues. However, after five years, the government discovers that revenues from the gasoline tax have declined. This situation would be most likely to occur if
A. the long-run elasticity of demand was greater than the long-run elasticity of supply. B. the demand for gasoline was perfectly inelastic in both the short run and the long run. C. the long-run elasticity of supply was much greater than the long-run elasticity of demand. D. the demand for gasoline was inelastic in the short run, but elastic in the long run.
If a nation's interest rates are relatively high compared to those of other countries, then the exchange value of its currency will tend to
A. appreciate under a system of fixed exchange rates. B. depreciate under a system of floating exchange rates. C. depreciate under a system of fixed exchange rates. D. appreciate under a system of floating exchange rates.