Lesson 4.4.1

4.4.1 Oligopoly characteristics and interdependence Quiz: OCR Economics, Unit 4

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 4.4.1, Oligopoly characteristics and interdependence: 20 multiple choice questions for the OCR Economics (H460), Unit 4: Market structures, written with Revision Ninja.

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The 20 questions

  1. What measures the percentage of total market share held by the top firms in an industry?

    • Concentration ratio
    • Elasticity ratio
    • Gini coefficient
    • Herfindahl index

  2. Which key oligopoly feature means one firm's actions directly affect the decisions of rival firms?

    • Monopolistic dominance
    • Perfect competition
    • Independence
    • Interdependence

  3. According to the kinked demand curve theory, what happens if an oligopolist raises its price?

    • Elastic demand reaction
    • Elastic supply reaction
    • Inelastic supply reaction
    • Inelastic demand reaction

  4. Under the kinked demand curve model, if a firm lowers its price, rivals will most likely:

    • Keep prices constant
    • Exit the market
    • Raise their prices
    • Match the cut

  5. What economic phenomenon does the kinked demand curve model primarily attempt to explain?

    • Price rigidity
    • Profit maximisation
    • Natural monopoly
    • Price discrimination

  6. Four firms have market shares of 30%, 20%, 15%, and 10%. What is the CR4?

    • 85%
    • 50%
    • 75%
    • 65%

  7. What is a formal agreement between oligopolistic firms to restrict output and fix prices called?

    • Duopoly
    • Monopsony
    • Monopoly
    • Cartel

  8. What type of collusion occurs without formal agreement, often through price leadership by a dominant firm?

    • Vertical integration
    • Tacit collusion
    • Overt collusion
    • Predatory collusion

  9. What state is reached when no firm can gain by unilaterally changing its chosen strategy?

    • Dynamic equilibrium
    • Allocative efficiency
    • Pareto efficiency
    • Nash equilibrium

  10. In a basic Prisoner's Dilemma game applied to oligopoly, competitive self-interest typically leads to:

    • Maximum joint profit
    • Socially optimal output
    • Allocative efficiency
    • Sub-optimal outcome

  11. Which strategy involves setting prices below average variable cost to force rivals out of the market?

    • Cost-plus pricing
    • Predatory pricing
    • Limit pricing
    • Peak-load pricing

  12. Setting a price just low enough to deter new firms from entering the market is known as:

    • Price discrimination
    • Limit pricing
    • Predatory pricing
    • Penetration pricing

  13. When smaller firms in an oligopoly automatically copy the price changes of the largest firm, this is:

    • Price discrimination
    • Price leadership
    • Price skimming
    • Price flexibility

  14. Loyalty cards, extensive advertising campaigns, and superior product warranties are all forms of:

    • Non-price competition
    • Price discrimination
    • Limit pricing
    • Collusive pricing

  15. Why does the marginal revenue curve have a vertical discontinuity in the kinked demand curve model?

    • Variable fixed costs
    • Rising marginal costs
    • Abrupt elasticity change
    • Falling average revenue

  16. High economies of scale and strong brand loyalty in an oligopoly act as high:

    • Barriers to entry
    • Barriers to exit
    • Variable costs
    • Sunk costs

  17. What is the main internal factor that often causes cartels to break down over time?

    • Government subsidies
    • Incentive to cheat
    • High fixed costs
    • Inelastic demand

  18. What short-run competitive response is triggered when one firm aggressively cuts prices and rivals follow suit?

    • Price war
    • Vertical merger
    • Tacit collusion
    • Market saturation

  19. In game theory, a strategy that yields the best outcome regardless of rival decisions is a:

    • Dominant strategy
    • Mixed strategy
    • Zero-sum strategy
    • Collusive strategy

  20. Which market structure is dominated by a small number of large, interdependent firms?

    • Monopoly
    • Perfect competition
    • Oligopoly
    • Monopolistic competition

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