Lesson 3.4.4
3.4.4 Oligopoly Quiz: Pearson Edexcel Economics, Unit 3
20 questions
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Lesson 3.4.4, Oligopoly: 20 multiple choice questions for the Pearson Edexcel Economics (9EC0), Unit 3: Theme 3: Business behaviour and the labour market, written with Revision Ninja.
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The 20 questions
-
Which key feature characterises an oligopolistic market structure?
- Perfect knowledge
- Freedom of entry
- Homogeneous products
- Interdependence of firms
-
What level of market concentration is typical of an oligopoly?
- Perfect concentration ratio
- Low concentration ratio
- Zero concentration ratio
- High concentration ratio
-
Three firms have market shares of 30 per cent, 20 per cent and 15 per cent. What is the 3-firm concentration ratio?
- 75 per cent
- 65 per cent
- 15 per cent
- 50 per cent
-
In an oligopoly, interdependence means a firm's decisions depend on:
- Supply chain costs
- Reactions of rivals
- Government price caps
- Consumer income levels
-
What type of collusion involves an explicit formal agreement between rival firms?
- Predatory pricing
- Tacit collusion
- Overt collusion
- Price leadership
-
What is a formal agreement between oligopolistic firms to fix prices and limit output called?
- Duopoly
- Monopsony
- Cartel
- Joint venture
-
When one dominant firm sets market prices that other firms follow, this is known as:
- Limit pricing
- Price leadership
- Cost-plus pricing
- Predatory pricing
-
Which model shows why collusion can break down due to individual incentives to cheat?
- Prisoner's dilemma
- Price leadership model
- Theory of contestability
- Kinked demand curve
-
In a standard prisoner's dilemma game between two oligopoly firms, what is the Nash equilibrium outcome?
- Both set low
- Both set high
- Neither sets prices
- One sets high
-
What is the main objective of predatory pricing?
- Deter new entrants
- Drive out rivals
- Match rival prices
- Cover average costs
-
What is the primary aim of limit pricing?
- Maximise short-run profits
- Eliminate price elasticity
- Deter new entrants
- Drive out rivals
-
Which of the following is an example of non-price competition?
- Offering discounts
- Limit pricing
- Predatory pricing
- Advertising and branding
-
What characterises a price war in an oligopoly?
- Non-price differentiation
- Reciprocal price undercutting
- Joint profit maximisation
- Formal collusive agreements
-
What does a high concentration ratio indicate about a market?
- Few dominant firms
- Low entry barriers
- High market contestability
- Perfectly elastic demand
-
Why might an oligopoly benefit consumers through non-price competition?
- Greater product innovation
- Guaranteed allocative efficiency
- Permanently lower prices
- Absence of advertising
-
Market shares are A 40 per cent, B 30 per cent, C 20 per cent and D 10 per cent. What is the 2-firm concentration ratio?
- 70 per cent
- 30 per cent
- 90 per cent
- 40 per cent
-
What is the primary reason formal cartels tend to collapse?
- Excessive legal protection
- Incentive to cheat
- High entry barriers
- Uniform cost structures
-
In the kinked demand curve model, how do rivals respond to a price increase?
- They ignore it
- They lower prices
- They match it
- They form cartels
-
Which market structure best describes a market with five firms holding 85 per cent of sales and high entry barriers?
- Monopoly
- Oligopoly
- Monopsony
- Perfect competition
-
Which key feature of oligopoly does game theory primarily help to model?
- Homogeneous products
- Perfect mobility
- Complete market information
- Interdependence between firms
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