Lesson 4.1.5.5
4.1.5.5 Oligopoly Quiz: AQA Economics, Unit 1
20 questions
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Lesson 4.1.5.5, Oligopoly: 20 multiple choice questions for the AQA Economics (7136), Unit 1: Individuals, firms, markets and market failure, written with Revision Ninja.
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The 20 questions
-
What key feature distinguishes an oligopoly from other market structures?
- Single seller
- Perfect information
- Interdependence
- Homogeneous output
-
A four-firm concentration ratio of 85% indicates which market structure?
- Monopolistic competition
- Perfect competition
- Oligopoly
- Monopsony
-
What term describes oligopoly firms agreeing, openly or tacitly, to restrict competition?
- Price discrimination
- Collusion
- Perfect competition
- Contestability
-
According to the kinked demand curve model, prices in oligopoly markets tend to be what?
- Rigid
- Continuously falling
- Volatile
- Zero
-
In the kinked demand curve model, how do rival firms respond to a price cut?
- They raise prices
- They match it
- They exit
- They ignore it
-
What occurs when a dominant firm sets market prices that other firms follow?
- Price leadership
- Price discrimination
- Limit pricing
- Predatory pricing
-
What is a formal agreement between oligopolistic firms to limit output and fix prices?
- A cartel
- A merger
- A joint venture
- A monopoly
-
Why do collusive cartels frequently suffer from internal instability?
- Incentive to cheat
- Strict price ceilings
- Falling consumer demand
- High interest rates
-
In game theory, what situation leads to firms failing to cooperate despite mutual benefits?
- Zero-sum game
- Prisoner's dilemma
- Dominant strategy
- Nash equilibrium
-
Which of the following is an example of non-price competition in an oligopoly?
- Price undercutting
- Loss leader pricing
- Brand advertising
- Predatory discounting
-
Why do oligopolies often prefer non-price competition over price competition?
- Avoids price wars
- Reduces fixed costs
- Eliminates entry barriers
- Guarantees monopoly power
-
Which structural feature helps maintain high concentration levels in oligopolistic markets?
- High entry barriers
- Zero sunk costs
- Product homogeneity
- Perfect information
-
What term describes oligopoly firms needing to consider rival reactions before acting?
- Interdependence
- Independence
- Atomicity
- Contestability
-
What main factor causes uncertainty in an oligopolistic firm's pricing decisions?
- Unpredictable rival reactions
- Stable consumer demand
- Fixed exchange rates
- Constant inflation rates
-
What is the most likely long-run outcome of a price war in an oligopoly?
- Increased entry barriers
- Lower firm profits
- Higher profit margins
- Greater market dominance
-
Oligopoly can be defined either by market structure or by which other feature?
- Consumer income
- Tax revenues
- Interest rates
- Market conduct
-
Which outcome of an oligopoly can directly benefit consumers through improved products?
- Higher market prices
- Restrictive quotas
- Research and development
- Tacit collusion
-
Why might an oligopolistic firm invest heavily in R&D rather than price cuts?
- Collusive price fixing
- Limit pricing
- Allocative efficiency
- Non-price competition
-
What allows colluding oligopolists to act like a single monopolist?
- Lowering entry barriers
- Maximising market share
- Maximising joint profit
- Increasing price elasticity
-
How is an n-firm concentration ratio calculated?
- Multiplying profit margins
- Summing market shares
- Dividing total profit
- Averaging market prices
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