What is Oligopoly and why does it occur. Concept Introduction: An industry with only few sellers is known as an oligopoly.

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Answer 1

Question

Chapter 14, Problem aWYWL

To determine

What is Oligopoly and why does it occur.

Concept Introduction:

An industry with only few sellers is known as an oligopoly.

Expert Solution & Answer

Explanation of Solution

A monopoly is one firm, duopoly is two firms and oligopoly is two or more firms. Oligopoly is that kind of market structure in which the decisions of one firm are influenced by the decisions of other firms. An oligopoly isn’t necessarily made up of large firms. It includes a number of small firms, with few sellers, each seller is likely to be aware of the actions of others. Oligopolies are the price makers rather than price takers. Due to high barriers to entry, it becomes difficult for new firms to enter the market. The primary reason because of which oligopolies came into existence was because of large investment of capital. Since the market was dominated by existing sellers who were price makers, it was difficult for new firms to enter the market and invest huge sums of capital to and distinguish its product from the prevailing ones. Many oligopolies have occurred by the combination or merger of two or more independent firms. Mergers resulted in higher market share. Also, as there is high entry barrier, firms may not choose to enter into the market and make losses. To distinguish its product from the existing product, the firm will have to bear huge expenses and may not be able to make profits in the short run. Owing to all these reasons, oligopolies came into existence.

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Problem 3 You are given the following demand for European luxury automobiles: Q=1,000 P-0.5.2/1.6 where P-Price of European luxury cars PA = Price of American luxury cars P, Price of Japanese luxury cars I= Annual income of car buyers Assume that each of the coefficients is statistically significant (i.e., that they passed the t-test). On the basis of the information given, answer the following questions 1. Comment on the degree of substitutability between European and American luxury cars and between European and Japanese luxury cars. Explain some possible reasons for the results in the equation. 2. Comment on the coefficient for the income variable. Is this result what you would expect? Explain. 3. Comment on the coefficient of the European car price variable. Is that what you would expect? Explain.

Problem 2: A manufacturer of computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships across the country and estimated the following demand for its product: Q=+15,000-2.80P+150A+0.3P+0.35Pm+0.2Pc (5,234) (1.29) (175) (0.12) (0.17) (0.13) R²=0.68 SER 786 F=21.25 The variables and their assumed values are P = Price of basic model = 7,000 Q==Quantity A = Advertising expenditures (in thousands) = 52 P = Average price of a personal computer = 4,000 P. Average price of a minicomputer = 15,000 Pe Average price of a leading competitor's workstation = 8,000 1. Compute the elasticities for each variable. On this basis, discuss the relative impact that each variable has on the demand. What implications do these results have for the firm's marketing and pricing policies? 2. Conduct a t-test for the statistical significance of each variable. In each case, state whether a one-tail or two-tail test is required. What difference, if any, does it make to…

Answer 2

Question

Chapter 14, Problem aWYWL

To determine

What is Oligopoly and why does it occur.

Concept Introduction:

An industry with only few sellers is known as an oligopoly.

Expert Solution & Answer

Explanation of Solution

A monopoly is one firm, duopoly is two firms and oligopoly is two or more firms. Oligopoly is that kind of market structure in which the decisions of one firm are influenced by the decisions of other firms. An oligopoly isn’t necessarily made up of large firms. It includes a number of small firms, with few sellers, each seller is likely to be aware of the actions of others. Oligopolies are the price makers rather than price takers. Due to high barriers to entry, it becomes difficult for new firms to enter the market. The primary reason because of which oligopolies came into existence was because of large investment of capital. Since the market was dominated by existing sellers who were price makers, it was difficult for new firms to enter the market and invest huge sums of capital to and distinguish its product from the prevailing ones. Many oligopolies have occurred by the combination or merger of two or more independent firms. Mergers resulted in higher market share. Also, as there is high entry barrier, firms may not choose to enter into the market and make losses. To distinguish its product from the existing product, the firm will have to bear huge expenses and may not be able to make profits in the short run. Owing to all these reasons, oligopolies came into existence.

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Answer 3

Question

Chapter 14, Problem aWYWL

To determine

What is Oligopoly and why does it occur.

Concept Introduction:

An industry with only few sellers is known as an oligopoly.

Expert Solution & Answer

Explanation of Solution

A monopoly is one firm, duopoly is two firms and oligopoly is two or more firms. Oligopoly is that kind of market structure in which the decisions of one firm are influenced by the decisions of other firms. An oligopoly isn’t necessarily made up of large firms. It includes a number of small firms, with few sellers, each seller is likely to be aware of the actions of others. Oligopolies are the price makers rather than price takers. Due to high barriers to entry, it becomes difficult for new firms to enter the market. The primary reason because of which oligopolies came into existence was because of large investment of capital. Since the market was dominated by existing sellers who were price makers, it was difficult for new firms to enter the market and invest huge sums of capital to and distinguish its product from the prevailing ones. Many oligopolies have occurred by the combination or merger of two or more independent firms. Mergers resulted in higher market share. Also, as there is high entry barrier, firms may not choose to enter into the market and make losses. To distinguish its product from the existing product, the firm will have to bear huge expenses and may not be able to make profits in the short run. Owing to all these reasons, oligopolies came into existence.

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Answer 4

Question

Chapter 14, Problem aWYWL

To determine

What is Oligopoly and why does it occur.

Concept Introduction:

An industry with only few sellers is known as an oligopoly.

Expert Solution & Answer

Explanation of Solution

A monopoly is one firm, duopoly is two firms and oligopoly is two or more firms. Oligopoly is that kind of market structure in which the decisions of one firm are influenced by the decisions of other firms. An oligopoly isn’t necessarily made up of large firms. It includes a number of small firms, with few sellers, each seller is likely to be aware of the actions of others. Oligopolies are the price makers rather than price takers. Due to high barriers to entry, it becomes difficult for new firms to enter the market. The primary reason because of which oligopolies came into existence was because of large investment of capital. Since the market was dominated by existing sellers who were price makers, it was difficult for new firms to enter the market and invest huge sums of capital to and distinguish its product from the prevailing ones. Many oligopolies have occurred by the combination or merger of two or more independent firms. Mergers resulted in higher market share. Also, as there is high entry barrier, firms may not choose to enter into the market and make losses. To distinguish its product from the existing product, the firm will have to bear huge expenses and may not be able to make profits in the short run. Owing to all these reasons, oligopolies came into existence.

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Answer 5

Chapter 14, Problem aWYWL

To determine

What is Oligopoly and why does it occur.

Concept Introduction:

An industry with only few sellers is known as an oligopoly.

Expert Solution & Answer

Explanation of Solution

A monopoly is one firm, duopoly is two firms and oligopoly is two or more firms. Oligopoly is that kind of market structure in which the decisions of one firm are influenced by the decisions of other firms. An oligopoly isn’t necessarily made up of large firms. It includes a number of small firms, with few sellers, each seller is likely to be aware of the actions of others. Oligopolies are the price makers rather than price takers. Due to high barriers to entry, it becomes difficult for new firms to enter the market. The primary reason because of which oligopolies came into existence was because of large investment of capital. Since the market was dominated by existing sellers who were price makers, it was difficult for new firms to enter the market and invest huge sums of capital to and distinguish its product from the prevailing ones. Many oligopolies have occurred by the combination or merger of two or more independent firms. Mergers resulted in higher market share. Also, as there is high entry barrier, firms may not choose to enter into the market and make losses. To distinguish its product from the existing product, the firm will have to bear huge expenses and may not be able to make profits in the short run. Owing to all these reasons, oligopolies came into existence.

Answer 6

Chapter 14, Problem aWYWL

To determine

What is Oligopoly and why does it occur.

Concept Introduction:

An industry with only few sellers is known as an oligopoly.

Expert Solution & Answer

Explanation of Solution

A monopoly is one firm, duopoly is two firms and oligopoly is two or more firms. Oligopoly is that kind of market structure in which the decisions of one firm are influenced by the decisions of other firms. An oligopoly isn’t necessarily made up of large firms. It includes a number of small firms, with few sellers, each seller is likely to be aware of the actions of others. Oligopolies are the price makers rather than price takers. Due to high barriers to entry, it becomes difficult for new firms to enter the market. The primary reason because of which oligopolies came into existence was because of large investment of capital. Since the market was dominated by existing sellers who were price makers, it was difficult for new firms to enter the market and invest huge sums of capital to and distinguish its product from the prevailing ones. Many oligopolies have occurred by the combination or merger of two or more independent firms. Mergers resulted in higher market share. Also, as there is high entry barrier, firms may not choose to enter into the market and make losses. To distinguish its product from the existing product, the firm will have to bear huge expenses and may not be able to make profits in the short run. Owing to all these reasons, oligopolies came into existence.

Answer 7

Chapter 14, Problem aWYWL

To determine

What is Oligopoly and why does it occur.

Concept Introduction:

An industry with only few sellers is known as an oligopoly.

Answer 8

Expert Solution & Answer

Explanation of Solution

A monopoly is one firm, duopoly is two firms and oligopoly is two or more firms. Oligopoly is that kind of market structure in which the decisions of one firm are influenced by the decisions of other firms. An oligopoly isn’t necessarily made up of large firms. It includes a number of small firms, with few sellers, each seller is likely to be aware of the actions of others. Oligopolies are the price makers rather than price takers. Due to high barriers to entry, it becomes difficult for new firms to enter the market. The primary reason because of which oligopolies came into existence was because of large investment of capital. Since the market was dominated by existing sellers who were price makers, it was difficult for new firms to enter the market and invest huge sums of capital to and distinguish its product from the prevailing ones. Many oligopolies have occurred by the combination or merger of two or more independent firms. Mergers resulted in higher market share. Also, as there is high entry barrier, firms may not choose to enter into the market and make losses. To distinguish its product from the existing product, the firm will have to bear huge expenses and may not be able to make profits in the short run. Owing to all these reasons, oligopolies came into existence.