Price Rigidity, Price Rigidity: The other significant feature of oligopoly is price

Price Rigidity

Price Rigidity:

The other significant feature of oligopoly is price rigidity. Price is rigid or sticky at the prevailing level due to the fear of reaction from the rival firms. When an oligopolistic firm lowers its price, the price reduction will be followed by rival firms. As an outcome, the firm loses its profit. Expecting similar kind of reaction, when the oligopolistic firm increases the price, the rival firms will not pursue. This would outcome in losing customers. In both manners the firm would face difficulties. Thus the price is rigid.

View Complete Question

Related Questions in Microeconomics

Q : Formula for primary deficit What is the

What is the formula for primary deficit? Answer: Primary deficit = fiscal deficit – interest payment.

Q : Middle relative income define by Census

The Department of the Census defines middle relative income as experienced while a family: (w) has adequate income to buy the fundamental food clothing and shelter required for survival. (x) would like to enhance their personal welfar

Q : Firm under monopoly A firm under

A firm under monopoly a price maker by the reasons shown below:A) The monopolist is a single seller of the product in market. Therefore it has full control over supply.B) There are no close replacements of the monopoly product,

Q : Reducing prices due to a commodity

Which of the given would NOT be taken as predatory behaviour: (w) Rapid technological innovation. (x) Reducing prices due to a commodity surplus. (y) Duplicative products intended to absorb shelf space. (z) Introduction of close substitutes for rivals

Q : Price elasticity for quantities and

Suppose that all these curves are infinitely long straight lines. There supply curve which is relatively (although not perfectly) price elastic for all quantities and prices is: (1) supply curve S1. (2) supply curve S2. (3) suppl

Q : Price discriminate for maximizing profit

Monsieur Cournot has a monopoly on an artesian well from that flows tasty spring water reputed to have medicinal properties. To ignore incurring variable costs, he is adamants that customers bring their own pails and also fill them in

Q : Estimate income elasticity of demand

When Y = income, that is the income elasticity of demand is approximately measured when the value of: (i) (% change in Q) / (% change in Y). (ii) ratio of the slopes of demand relative to supply. (iii) (% change in Q) / (% change in P). (iv) constant

Q : Analytic Time-The Short Run I have a

I have a problem in economics on Analytic Time-The Short Run. Please help me in the following question. Economists classify a time-period in which at least one resource is fixed as: (i) Short run. (ii) Long run. (iii) Production period. (iv) Profit period.

Q : Determine price elasticity coefficient

In below this demonstrated figure, there demand curve: (w) D0D0 is perfectly price-inelastic. (x) DD is perfectly price-elastic. (y) DD has a price elasticity coefficient of unity (1). (z) D0D0 has a price e

Q : Find price elasticity of demand for

Suppose yearly steel sales double to 80 million tons while the price falls $40 per ton, to $180 per ton. Therefore price elasticity of demand for steel is approximately: (w) 3.333. (x) 10.000. (y) 2.500. (z) 6.667.

Discover Q & A

Leading Solution Library

Avail More Than 1441730 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads

No hassle, Instant Access

Start Discovering

18,76,764

1943675
Asked

3,689

Active Tutors

1441730

Questions
Answered

Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!

Submit Assignment