Due to various circumstances, several large firms have most of the sales in an industry. Which term describes this situation?
a. A natural monopoly
b. A legal monopoly
c. An oligopoly
d. A cartel
c. An oligopoly
An oligopoly occurs when circumstances allow several large firms to have all or most of the sales in an industry.
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Use the figure below to answer the following question.
What area represents producer surplus after the government imposes the excise tax on the market?
A. triangle $21a$13 B. square $13ac$9 C. triangle abc D. triangle $1c$9
Once production has reached the maximum average product of labor, if production increases then
A) average fixed cost rises. B) total costs decrease. C) total product decreases. D) decreasing marginal returns occur. E) the plant size must be increased.
All of the following are true regarding a long-term contract between an upstream firm and a downstream firm except which one?
A) The downstream firm can incur opportunity costs. B) The upstream firm can incur opportunity costs. C) Both firms have increased flexibility. D) Changes in market conditions can impose new costs to either firm.
In an oligopoly
A) there are many firms. B) there is one firm. C) there are few firms. D) firms openly collude.