Question

In a duopoly, if one firm increases its price, then the other firm can Group of answer choices keep its price constant and thus increase its market share. keep its price constant and thus decrease its market share. increase its price and thus increase its market share. decrease its price and thus decrease its market share.

Answer 1

Answer:

keep its price constant and thus decrease its market share.

Explanation:

A monopoly is a market structure which is typically characterized by a single-seller who sells a unique product in the market by dominance. This ultimately implies that, it is a market structure wherein the seller has no competitor because he is solely responsible for the sale of unique products without close substitutes.

Also, an oligopoly can be defined as a market structure comprising of a small number of firms (sellers) offering identical or similar products, wherein none can limit the significant influence of others.

Hence, it is a market structure that is distinguished by several characteristics, one of which is either similar or identical products and dominance by few firms.

On the other hand, duopoly can be defined as a market structure in which two companies (suppliers) or business firms own all or nearly all of the goods and services in a market. Thus, these two companies (suppliers) or business firms have an exclusive control over the goods and services in a market.

Hence, when a company (supplier) or business firm own increases its price in a duopoly, then the other company (supplier) or business firm can keep its price constant and thus decrease its market share.