--%>
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 : Monopolist in the long run Within the

    Within the long run, here a monopolist: (w) will produce a positive economic profit. (x) will produce an economic profit of zero. (y) may incur an economic loss. (z) will produce an economic profit of zero or greater.

    Q : Stable Competitive Economy Into a

    Into a stable competitive economy without innovation, transaction, or uncertainty costs, all accounting profits would be: (w) pure economic profits. (x) payments required to secure owner-provided resources. (y) pure e

    		•
  • Q : Barriers to entry of dominated industry

    An industry dominated by small huge firms shielded through barriers to entry is: (1) a monopoly. (2) a vertically integrated industry. (3) an oligopolistic industry. (4) an aggregated industry. (5) a cartel. I need

    		•
  • Q : Existence of purely competitive farm in

    This purely competitive rose farm would most likely exit in this industry with the long run when the wholesale price per dozen roses fell below: (i) $4.50 per dozen roses. (ii) $5.00 per dozen roses. (iii) $5.50 per dozen roses. (iv) $6.00 per dozen r

    		•
  • Q : Profit Maximization in Resource Markets

    I have a problem in economics on Profit Maximization in Resource Markets. Please help me in the following question. To make a decision regarding resource hire, the firm should consider: (1) The price of resource. (2) The productivity (MP) of resource. (3) Output price

    		•
  • Q : Define straight line of supply curve

    When a supply curve is a straight line start from the origin, in that case supply is: (i) relatively elastic for all prices and quantities. (ii) relatively inelastic for all prices and quantities. (iii) unitarily elastic for all prices and quantities.

    		•
  • Q : Upwardly sloping supplies of resources

    When supplies of some resources are upwardly sloping to an industry, in that case increasing the industry’s output results within: (w) higher output due to increased profits from falling input prices. (x) reductions of output because of increase

    		•
  • Q : Determine annual interest rate If all

    If all US Treasury bonds are perpetuities that annually pay the sum of one thousand and 00/100 dollars [$1000] each year, always, to the holder of this bond starting one year from today and if the current market price of such bond wer

    		•
  • Q : Functions of Profits and Losses The

    The functions of profits into a market economy do NOT comprise: (1) stimulation for firms to be innovative and efficient. (2) compensating savers for delays of consumption. (3) signaling changing business conditions. (4) inducing mimi

    		•
  • Q : Shifting demand of labor The demand for

    The demand for labor will shift because of changes in all of the given except: (w) prices of other resources. (x) prices of output. (y) MPP (z) wages. Hello guys I want your advice. Please recommend some views for

    		•