--%>
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 : Market demand with market power

    LoCalLoCarbo has turn into the favorite of fad dieters. There in illustrated graph curve B shows: (i) LoCalLoCarbo’s marginal cost curve. (ii) LoCalLoCarbo’s average variable cost curve. (iii) LoCalLoCarbo’s average total cost curve. (iv) the market

    		•
  • Q : Income elasticity and inferior goods

    Raises in real income that causes the demands for: (i) inferior goods to shift upward and to the left. (ii) normal goods to shift upward and to the right. (iii) substitute goods to shift upward and to the right. (iv) complementary goods to decline mor

    		•
  • Q : Determine marginal revenue and marginal

    While this firm maximizes economic profits, in that case marginal revenue and marginal costs would be: (1) $4 per unit. (2) $6 per unit. (3) $8 per unit. (4) $10 per unit. (5) $12 per unit.

  • Q : Profit Maximization-Labor Markets If,

    If, after hiring the very last worker, the firm's profit is similar as it was before the last worker was hired, then the firm must: (1) Hire more workers to raise gain. (2) Layoff certain workers to raise the gain. (3) Not hire any more workers. (4) Shut down in short

    		•
  • Q : Distribution and production for social

    Society as entire benefits most when the distribution and production of penicillin corresponds to: (a) point a. (b) point b. (c) point f. (d) point d. (e) point g.

    Q : Profit maximizing strategy Prohibition

    Prohibition Corporation would exactly break-even on its St. Valentine’s Day software when, in place of correctly identifying its profit maximizing strategy, this: (1) operated at point i, charging just $20 per copy and producing

    		•
  • Q : Taxes on pure land rent Taxes on pure

    Taxes on pure land rents: (1) especially distort economic behavior. (2) are forward shifted to consumers. (3) transfer income from the public treasury to private landowners. (4) are allocatively neutral relative to most alternative taxes. (5) are over

    		•
  • Q : Present value of a bond paying by

    At an interest rate of 5 percent per year the present value of a bond paying $100 yearly forever is: (a) infinite. (b) $500. (c) $909.10. (d) $2000. I need a good answer on the topic of Economics problems. Please give me your sugge

    		•
  • Q : Harmness of price discrimination Price

    Price discrimination generally harms: (w) all consumers and benefits firms along with market power. (x) all firms along with market power and benefits all consumers. (y) some consumers, when helping sellers and several other consumers. (z) all sellers

    		•
  • Q : Monopolistic competition in the long run

    In the past 4 decades, the still increasing globalization of trade has caused the United State automobile market to evolve by: (i) highly concentrated oligopoly towards monopolistic competition. (ii) pure monopoly to pure competition. (iii) a cartel t

    		•