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 : Problem on average household income Can

Can someone help me in finding out the right answer from the given options. Demand curve for the gasoline, a normal good, would shift to right when: (1) The legal least age to drive was raised to 18 all through the world. (2) New oil fields were discovered and exploit

Q : Average Variable Cost-Average Total

Describe the relationship among Average Variable Cost (AVC) Average, Total Cost (ATC) and marginal Cost (MC)? Answer: A) If MC

Q : Spending pattern in Substitution Effects

I have a problem in economics on spending pattern in Substitution Effects. Please help me in the following question. Even when your real income were held steady by adjusting for price modifications, your spending pattern would react to modifications in relative prices

Q : Problem on Jurisdictional Strikes The

The Taft-Hartley Act prohibited strikes against the firm over the issue of which of two or more competing unions would symbolize the firm’s employees. These strikes are termed as: (i) Jurisdictional strikes. (ii) Strategic representation strikes

Q : Capitalization in expected income

Capitalization is the process whereby wealth is produced and after that recognized when: (1) financial institutions transform households’ saving in economic investment. (2) asset prices are adjusted through market forces to reflect the present v

Q : Complementary goods problem When a

When a price cut for licorice gummy bears decreases the demand for tuna fish ice cream, then: (i) tuna fish ice cream and licorice gummy bears are both complementary goods. (ii) Price scrambles for tuna fish ice cream will diminish the demand for licorice gummy bears.

Q : How is a shift in demand reflected in a

How is a shift in demand reflected in a demand equation? How is a shift in supply reflected in a supply equation? How is a movement along a demand (supply) curve reflected in a demand (supply) equation?

Q : Increasing demand for Complementary

Can someone please help me in finding out the accurate answer from the following question. When tortilla chips go on sale for fifty percent off, then the demand for salsa is most probable to: (1) Stay similar. (2) Reduce. (3) Raise. (d) Raise only when salsa as well g

Q : Right-to-Work Laws The states which

The states which have ‘Right to Work’ laws, and collective bargaining agreements: (i) Can’t need all the employees to join a union in a certain period after being hired. (ii) Generally specify the number of employees a firm should hire. (iii) Should

Q : Problem Bilateral Monopoly The word

The word economists employ to explain a condition where a powerful seller confronts the powerful buyer is: (1) Reciprocal exploitation. (2) Strategic bloc management. (3) Dialectical bargaining. (4) Ancillary reciprocity. (5) Bilateral monopoly.

Discover Q & A

Leading Solution Library

Avail More Than 1430187 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads

No hassle, Instant Access

Start Discovering

18,76,764

1935769
Asked

3,689

Active Tutors

1430187

Questions
Answered

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

Submit Assignment