--%>
Assignment Help - homework help

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.

   Related Questions in Microeconomics

  • Q : Demand curve for peanuts Question: a)

    Question: a) Johnny consumes peanuts (x1) and a composite good (x2). His utility function is U = x1x2. His marginal utilities are MU1 = x<

    		•
  • Q : Determine unitarily elastic demand of

    Assume that many students have fixed “pizza budgets.” When the price per slice falls by $10 to $1 along such demand curve for pizza weekly near a college campus, then the price elasticity of demand for pizza: (w) rises towards infinity. (x

    		•
  • Q : Percentage of incomes persistently The

    The percentage of American families along with incomes persistently below the poverty line is around: (w) 1 2%. (x) 3 5%. (y) 5 7%. (z) 8 10%. Can anybody suggest me the proper explanation for given problem regardi

    		•
  • Q : Price of Substitute goods What occurs

    What occurs to the demand for a good whenever the price of Substitute goods downs?Answer: Whenever the price of substitute good downs, then the demand for the specified good too downs.

    		•
  • Q : Law of demand in Ceteris Paribus Can

    Can someone help me in finding out the right answer from the given options. The law of demand supposes that the income and tastes of the consumers are: (i) Strong determinants of the prices. (ii) Causes of movements all along the demand curve. (iii) C

    		•
  • Q : Economy-efficiency while transaction

    Transaction costs tend to be decreased, consumer prices tend to be lower and additionally stable and economy-wide efficiency is enhanced if: (1) rigid wage and price controls are imposed. (2) central planning fosters

    		•
  • Q : Applied Writing must use graphs to

    must use graphs to demonstrate/support answers where available. Submission is to be made tonight, so needs to be finished urgently

    		•
  • Q : Goals of the Firm Most of the

    Most of the economists believe firms tend to proficiently maximize the profits since of: (i) Stockholder pressure. (ii) Competition for the management positions. (iii) Principal-agent conditions. (iv) The chance of corporate take-over.

    Q : Maximized profit of purely-competitive

    Profit is maximized as in illustrated graph when this purely-competitive lumber mill produces at: (1) point a. (2) point b. (3) point c. (4) point d. (5) point e.

    Q : Lorenz curve as graphical device A

    A Lorenz curve is graphical device which can be utilized to portray the: (w) number of people below the poverty level. (x) conflict between high tax rates and high tax revenues. (y) relative inequalities in the distribution of a variable across a popu

    		•