Relevant demand curve when rivals match the price change.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 9, Problem 1CACQ

a.

To determine

Relevant demand curve when rivals match the price change.

a.

Expert Solution

Answer to Problem 1CACQ

D₂is the relevant demand curve when the rivals match any change in the price level.

Explanation of Solution

When the rival firm match the changes in level of price, the demand curve that is inelastic is more relevant. The reason is that in case of inelastic demand, when there is a change in the price level, the percentage of demand of the consumer does not reduce more than the percentage increase in the prices. D₂ is more inelastic than D₁, therefore, it is more relevant.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

b.

To determine

Relevant demand curve when the rivals do not match any price change.

b.

Expert Solution

Answer to Problem 1CACQ

D₁is the relevant demand curve when the change in the level of price is not matched by the rival firms.

Explanation of Solution

The elastic demand curve tends to be more relevant when the change in level of price is not matched by the rival firm. Therefore, D₂ is the more relevant demand curve.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

1)

To determine

Price charged by the firm if 20 units are produced.

1)

Expert Solution

Answer to Problem 1CACQ

If 20 units are produced, then the price charged is $20.

Explanation of Solution

If a firm produces 20 units of output, it faces the lower portion of the demand curve. The lower portion of the demand curve D₂, from the point of kink indicates that the price charged is $20.

Economics Concept Introduction

Introduction:Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

2)

To determine

Number of units sold if price is $70.

2)

Expert Solution

Answer to Problem 1CACQ

Zero units are sold when the price is $70.

Explanation of Solution

When the price level of the firm is more than $60, the upper portion of the demand curve is relevant. At that level, the quantity produced is zero.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

3)

To determine

Range in marginal cost when the firm continues to charge a price of $60.

3)

Expert Solution

Answer to Problem 1CACQ

The range of the marginal cost when the firm continues to charge a price of $60 is $20 to $50.

Explanation of Solution

The range at which the changes in the marginal cost does not lead to changes in the profits of the firm is the range where the marginal revenue also remains unchanged. According to the marginal revenue curves of the firms, the profit level remains same when price is changed from $20 to $50.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

1. After the reopening of borders with mainland China following the COVID-19 lockdown, residents living near the border now have the option to shop for food on either side. In Hong Kong, the cost of food is at its listed price, while across the border in mainland China, the price is only half that of Hong Kong's. A recent report indicates a decline in food sales in Hong Kong post-reopening. ** Diagrams need not be to scale; Focus on accurately representing the relevant concepts and relationships rather than the exact proportions. (a) Using a diagram, explain why Hong Kong's food sales might have dropped after the border reopening. Assume that consumers are indifferent between purchasing food in Hong Kong or mainland China, and therefore, their indifference curves have a slope of one like below. Additionally, consider that there are no transport costs and the daily food budget for consumers is identical whether they shop in Hong Kong or mainland China. I 3. 14 (b) In response to the…

2. Health Food Company is a well-known global brand that specializes in healthy and organic food products. One of their main products is organic chicken, which they source from small farmers in the area. Health Food Company is the sole buyer of organic chicken in the market. (a) In the context of the organic chicken industry, what type of market structure is Health Food Company operating in? (b) Using a diagram, explain how the identified market structure affects the input pricing and output decisions of Health Food Company. Specifically, include the relevant curves and any key points such as the profit-maximizing price and quantity. () (c) How can encouraging small chicken farmers to form bargaining associations help improve their trade terms? Explain how this works by drawing on the graph in answer (b) to illustrate your answer.

2. Suppose that a farmer has two ways to produce his crop. He can use a low-polluting technology with the marginal cost curve MCL or a high polluting technology with the marginal cost curve MCH. If the farmer uses the high-polluting technology, for each unit of quantity produced, one unit of pollution is also produced. Pollution causes pollution damages that are valued at $E per unit. The good produced can be sold in the market for $P per unit. P 1 MCH 0 Q₁ MCL Q2 E a. b. C. If there are no restrictions on the firm's choices, which technology will the farmer use and what quantity will he produce? Explain, referring to the area identified in the figure Given your response in part a, is it socially efficient for there to be no restriction on production? Explain, referring to the area identified in the figure If the government restricts production to Q1, what technology would the farmer choose? Would a socially efficient outcome be achieved? Explain, referring to the area identified in…

Answer 2

Question

Chapter 9, Problem 1CACQ

a.

To determine

Relevant demand curve when rivals match the price change.

a.

Expert Solution

Answer to Problem 1CACQ

D₂is the relevant demand curve when the rivals match any change in the price level.

Explanation of Solution

When the rival firm match the changes in level of price, the demand curve that is inelastic is more relevant. The reason is that in case of inelastic demand, when there is a change in the price level, the percentage of demand of the consumer does not reduce more than the percentage increase in the prices. D₂ is more inelastic than D₁, therefore, it is more relevant.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

b.

To determine

Relevant demand curve when the rivals do not match any price change.

b.

Expert Solution

Answer to Problem 1CACQ

D₁is the relevant demand curve when the change in the level of price is not matched by the rival firms.

Explanation of Solution

The elastic demand curve tends to be more relevant when the change in level of price is not matched by the rival firm. Therefore, D₂ is the more relevant demand curve.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

1)

To determine

Price charged by the firm if 20 units are produced.

1)

Expert Solution

Answer to Problem 1CACQ

If 20 units are produced, then the price charged is $20.

Explanation of Solution

If a firm produces 20 units of output, it faces the lower portion of the demand curve. The lower portion of the demand curve D₂, from the point of kink indicates that the price charged is $20.

Economics Concept Introduction

Introduction:Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

2)

To determine

Number of units sold if price is $70.

2)

Expert Solution

Answer to Problem 1CACQ

Zero units are sold when the price is $70.

Explanation of Solution

When the price level of the firm is more than $60, the upper portion of the demand curve is relevant. At that level, the quantity produced is zero.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

3)

To determine

Range in marginal cost when the firm continues to charge a price of $60.

3)

Expert Solution

Answer to Problem 1CACQ

The range of the marginal cost when the firm continues to charge a price of $60 is $20 to $50.

Explanation of Solution

The range at which the changes in the marginal cost does not lead to changes in the profits of the firm is the range where the marginal revenue also remains unchanged. According to the marginal revenue curves of the firms, the profit level remains same when price is changed from $20 to $50.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 9, Problem 1CACQ

a.

To determine

Relevant demand curve when rivals match the price change.

a.

Expert Solution

Answer to Problem 1CACQ

D₂is the relevant demand curve when the rivals match any change in the price level.

Explanation of Solution

When the rival firm match the changes in level of price, the demand curve that is inelastic is more relevant. The reason is that in case of inelastic demand, when there is a change in the price level, the percentage of demand of the consumer does not reduce more than the percentage increase in the prices. D₂ is more inelastic than D₁, therefore, it is more relevant.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

b.

To determine

Relevant demand curve when the rivals do not match any price change.

b.

Expert Solution

Answer to Problem 1CACQ

D₁is the relevant demand curve when the change in the level of price is not matched by the rival firms.

Explanation of Solution

The elastic demand curve tends to be more relevant when the change in level of price is not matched by the rival firm. Therefore, D₂ is the more relevant demand curve.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

1)

To determine

Price charged by the firm if 20 units are produced.

1)

Expert Solution

Answer to Problem 1CACQ

If 20 units are produced, then the price charged is $20.

Explanation of Solution

If a firm produces 20 units of output, it faces the lower portion of the demand curve. The lower portion of the demand curve D₂, from the point of kink indicates that the price charged is $20.

Economics Concept Introduction

Introduction:Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

2)

To determine

Number of units sold if price is $70.

2)

Expert Solution

Answer to Problem 1CACQ

Zero units are sold when the price is $70.

Explanation of Solution

When the price level of the firm is more than $60, the upper portion of the demand curve is relevant. At that level, the quantity produced is zero.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

3)

To determine

Range in marginal cost when the firm continues to charge a price of $60.

3)

Expert Solution

Answer to Problem 1CACQ

The range of the marginal cost when the firm continues to charge a price of $60 is $20 to $50.

Explanation of Solution

The range at which the changes in the marginal cost does not lead to changes in the profits of the firm is the range where the marginal revenue also remains unchanged. According to the marginal revenue curves of the firms, the profit level remains same when price is changed from $20 to $50.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 9, Problem 1CACQ

a.

To determine

Relevant demand curve when rivals match the price change.

a.

Expert Solution

Answer to Problem 1CACQ

D₂is the relevant demand curve when the rivals match any change in the price level.

Explanation of Solution

When the rival firm match the changes in level of price, the demand curve that is inelastic is more relevant. The reason is that in case of inelastic demand, when there is a change in the price level, the percentage of demand of the consumer does not reduce more than the percentage increase in the prices. D₂ is more inelastic than D₁, therefore, it is more relevant.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

b.

To determine

Relevant demand curve when the rivals do not match any price change.

b.

Expert Solution

Answer to Problem 1CACQ

D₁is the relevant demand curve when the change in the level of price is not matched by the rival firms.

Explanation of Solution

The elastic demand curve tends to be more relevant when the change in level of price is not matched by the rival firm. Therefore, D₂ is the more relevant demand curve.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

1)

To determine

Price charged by the firm if 20 units are produced.

1)

Expert Solution

Answer to Problem 1CACQ

If 20 units are produced, then the price charged is $20.

Explanation of Solution

If a firm produces 20 units of output, it faces the lower portion of the demand curve. The lower portion of the demand curve D₂, from the point of kink indicates that the price charged is $20.

Economics Concept Introduction

Introduction:Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

2)

To determine

Number of units sold if price is $70.

2)

Expert Solution

Answer to Problem 1CACQ

Zero units are sold when the price is $70.

Explanation of Solution

When the price level of the firm is more than $60, the upper portion of the demand curve is relevant. At that level, the quantity produced is zero.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

3)

To determine

Range in marginal cost when the firm continues to charge a price of $60.

3)

Expert Solution

Answer to Problem 1CACQ

The range of the marginal cost when the firm continues to charge a price of $60 is $20 to $50.

Explanation of Solution

The range at which the changes in the marginal cost does not lead to changes in the profits of the firm is the range where the marginal revenue also remains unchanged. According to the marginal revenue curves of the firms, the profit level remains same when price is changed from $20 to $50.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 9, Problem 1CACQ

a.

To determine

Relevant demand curve when rivals match the price change.

a.

Expert Solution

Answer to Problem 1CACQ

D₂is the relevant demand curve when the rivals match any change in the price level.

Explanation of Solution

When the rival firm match the changes in level of price, the demand curve that is inelastic is more relevant. The reason is that in case of inelastic demand, when there is a change in the price level, the percentage of demand of the consumer does not reduce more than the percentage increase in the prices. D₂ is more inelastic than D₁, therefore, it is more relevant.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

b.

To determine

Relevant demand curve when the rivals do not match any price change.

b.

Expert Solution

Answer to Problem 1CACQ

D₁is the relevant demand curve when the change in the level of price is not matched by the rival firms.

Explanation of Solution

The elastic demand curve tends to be more relevant when the change in level of price is not matched by the rival firm. Therefore, D₂ is the more relevant demand curve.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

1)

To determine

Price charged by the firm if 20 units are produced.

1)

Expert Solution

Answer to Problem 1CACQ

If 20 units are produced, then the price charged is $20.

Explanation of Solution

If a firm produces 20 units of output, it faces the lower portion of the demand curve. The lower portion of the demand curve D₂, from the point of kink indicates that the price charged is $20.

Economics Concept Introduction

Introduction:Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

2)

To determine

Number of units sold if price is $70.

2)

Expert Solution

Answer to Problem 1CACQ

Zero units are sold when the price is $70.

Explanation of Solution

When the price level of the firm is more than $60, the upper portion of the demand curve is relevant. At that level, the quantity produced is zero.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

3)

To determine

Range in marginal cost when the firm continues to charge a price of $60.

3)

Expert Solution

Answer to Problem 1CACQ

The range of the marginal cost when the firm continues to charge a price of $60 is $20 to $50.

Explanation of Solution

The range at which the changes in the marginal cost does not lead to changes in the profits of the firm is the range where the marginal revenue also remains unchanged. According to the marginal revenue curves of the firms, the profit level remains same when price is changed from $20 to $50.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

Answer 6

Chapter 9, Problem 1CACQ

a.

To determine

Relevant demand curve when rivals match the price change.

a.

Expert Solution

Answer to Problem 1CACQ

D₂is the relevant demand curve when the rivals match any change in the price level.

Explanation of Solution

When the rival firm match the changes in level of price, the demand curve that is inelastic is more relevant. The reason is that in case of inelastic demand, when there is a change in the price level, the percentage of demand of the consumer does not reduce more than the percentage increase in the prices. D₂ is more inelastic than D₁, therefore, it is more relevant.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

Answer 7

Chapter 9, Problem 1CACQ

a.

To determine

Relevant demand curve when rivals match the price change.

Answer 8

a.

Expert Solution

Answer to Problem 1CACQ

D₂is the relevant demand curve when the rivals match any change in the price level.

Answer 9

a.

Expert Solution

Answer 10

a.

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

When the rival firm match the changes in level of price, the demand curve that is inelastic is more relevant. The reason is that in case of inelastic demand, when there is a change in the price level, the percentage of demand of the consumer does not reduce more than the percentage increase in the prices. D₂ is more inelastic than D₁, therefore, it is more relevant.

Answer 13

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

Answer 14

b.

To determine

Relevant demand curve when the rivals do not match any price change.

b.

Expert Solution

Answer to Problem 1CACQ

D₁is the relevant demand curve when the change in the level of price is not matched by the rival firms.

Explanation of Solution

The elastic demand curve tends to be more relevant when the change in level of price is not matched by the rival firm. Therefore, D₂ is the more relevant demand curve.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

Answer 15

b.

To determine

Relevant demand curve when the rivals do not match any price change.

Answer 16

b.

Expert Solution

Answer to Problem 1CACQ

D₁is the relevant demand curve when the change in the level of price is not matched by the rival firms.

Answer 17

b.

Expert Solution

Answer 18

b.

Expert Solution

Answer 19

Expert Solution

Answer 20

Explanation of Solution

The elastic demand curve tends to be more relevant when the change in level of price is not matched by the rival firm. Therefore, D₂ is the more relevant demand curve.

Answer 21

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

Answer 22

1)

To determine

Price charged by the firm if 20 units are produced.

1)

Expert Solution

Answer to Problem 1CACQ

If 20 units are produced, then the price charged is $20.

Explanation of Solution

If a firm produces 20 units of output, it faces the lower portion of the demand curve. The lower portion of the demand curve D₂, from the point of kink indicates that the price charged is $20.

Economics Concept Introduction

Introduction:Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

Answer 23

1)

To determine

Price charged by the firm if 20 units are produced.

Answer 24

1)

Expert Solution

Answer to Problem 1CACQ

If 20 units are produced, then the price charged is $20.

Answer 25

1)

Expert Solution

Answer 26

1)

Expert Solution

Answer 27

Expert Solution

Answer 28

Explanation of Solution

If a firm produces 20 units of output, it faces the lower portion of the demand curve. The lower portion of the demand curve D₂, from the point of kink indicates that the price charged is $20.

Answer 29

Economics Concept Introduction

Introduction:Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

Answer 30

2)

To determine

Number of units sold if price is $70.

2)

Expert Solution

Answer to Problem 1CACQ

Zero units are sold when the price is $70.

Explanation of Solution

When the price level of the firm is more than $60, the upper portion of the demand curve is relevant. At that level, the quantity produced is zero.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

Answer 31

2)

To determine

Number of units sold if price is $70.

Answer 32

2)

Expert Solution

Answer to Problem 1CACQ

Zero units are sold when the price is $70.

Answer 33

2)

Expert Solution

Answer 34

2)

Expert Solution

Answer 35

Expert Solution

Answer 36

Explanation of Solution

When the price level of the firm is more than $60, the upper portion of the demand curve is relevant. At that level, the quantity produced is zero.

Answer 37

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

Answer 38

3)

To determine

Range in marginal cost when the firm continues to charge a price of $60.

3)

Expert Solution

Answer to Problem 1CACQ

The range of the marginal cost when the firm continues to charge a price of $60 is $20 to $50.

Explanation of Solution

The range at which the changes in the marginal cost does not lead to changes in the profits of the firm is the range where the marginal revenue also remains unchanged. According to the marginal revenue curves of the firms, the profit level remains same when price is changed from $20 to $50.

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.

Answer 39

3)

To determine

Range in marginal cost when the firm continues to charge a price of $60.

Answer 40

3)

Expert Solution

Answer to Problem 1CACQ

The range of the marginal cost when the firm continues to charge a price of $60 is $20 to $50.

Answer 41

3)

Expert Solution

Answer 42

3)

Expert Solution

Answer 43

Expert Solution

Answer 44

Explanation of Solution

The range at which the changes in the marginal cost does not lead to changes in the profits of the firm is the range where the marginal revenue also remains unchanged. According to the marginal revenue curves of the firms, the profit level remains same when price is changed from $20 to $50.

Answer 45

Economics Concept Introduction

Introduction: Oligopoly can be interpreted as the form of market that involves few big firms. The prices charged by the firms in this type of market are based on the prices charged by the competitors. Oligopolies often results in reduced competition due to price collusion.