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 : Involvement of price makers firms

Price-maker firms would most likely comprise: (1) a tomato farmer in California. (2) a sheep herder who produces wool in a remote part of New Zealand. (3) a stock broker who contacts customers through the internet. (4) a rural grocery store. (5) the b

Q : Problem on change in preferences Can

Can someone help me in finding out the right answer from the given options. Tim liked to snack on slim jims on fishing; however his friend Earl for all time brought beef jerky. Tom slowly developed a taste for jerky and at present buys it more frequently than slim jim

Q : Adverse Selection example Can someone

Can someone please help me in finding out the accurate answer from the following question. The car dealer never proposed to honor a guarantee on a utilized car, providing an illustration of: (1) Moral hazard. (2) Economic dishonesty. (3) Price discrimination. (4) Mark

Q : Problem on income and substitution

Jim a vegetarian. All he eats is lettuce and cheese. His original budget constraint and utility maximizing bundle are illustrated in the graph shown below: 1531</span></p>
</div>

</li>

</td>
</tr><tr>
<td>

<li>
<div class=

Q : Causes for diminishing returns to factor

What are the causes for diminishing returns to factor? Answer: 1) Over utilization of

Q : Slope of ray by origin in price

The slope of the ray by the origin which is tangent to point b equivalents to: (w) the reciprocal of the price elasticity of demand. (x) P / Q. (y) 0a / 0c. (z) the price elasticity of supply.

Q : Calculations of price elasticity of

At a price of $50, the demand for DVD games is roughly: (w) perfectly elastic. (x) perfectly inelastic. (y) unitarily elastic. (z) relatively inelastic.

Q : Types of Surveys Types of Surveys :

Types of Surveys: Surveys can be classified by their method of data collection. Mail, telephone, and in-person interview surveys are the most common. Extracting data from samples of records is also frequently done.

Q : Dilemma model of prisoner When the

When the Kroger grocery chain raises the price of Starbuck’s Frappuccino, in that case Safeway will remain its price the same. Although, if Kroger drops the price of Frappuccino, then Safeway will match the price cut. This kind of behavior conforms to the: (1) s

Q : Determine produce economic profit When

When point e corresponds to $9,000 per RoboMaid, Robomatic can produce economic profit all month of at most around: (1) $25 million. (2) $40 million. (3) $55 million. (4) $70 million. (5) $85 million.

Discover Q & A

Leading Solution Library

Avail More Than 1445645 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads

No hassle, Instant Access

Start Discovering

18,76,764

1944789
Asked

3,689

Active Tutors

1445645

Questions
Answered

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

Submit Assignment