GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Increase market share and profits.
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Obtain the highest price possible.
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Always follow rivals if they raise price.
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Be the market leader in innovation.
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Detailed explanation-1: -An oligopoly is a collection of multiple companies in the same industry working together to fix prices to ultimately earn higher profits and discourage lower prices.
Detailed explanation-2: -Competitive oligopolies When competing, oligopolists prefer non-price competition in order to avoid price wars. A price reduction may achieve strategic benefits, such as gaining market share, or deterring entry, but the danger is that rivals will simply reduce their prices in response.
Detailed explanation-3: -Oligopolists earn their highest profits if they can band together as a cartel and act like a monopolist by reducing output and raising price. Since each member of the oligopoly can benefit individually from expanding output, such collusion often breaks down-especially since explicit collusion is illegal.
Detailed explanation-4: -Oligopoly markets are markets dominated by a small number of suppliers. They can be found in all countries and across a broad range of sectors. Some oligopoly markets are competitive, while others are significantly less so, or can at least appear that way.