1. The market for smartphones is generally considered an oligopoly market, with

Question

1. The market for smartphones is generally considered an oligopoly market, with the top 4 firms accounting for roughly 80% of sales. What is the most important thing a producer of smartphones like Apple can do to earn profits in this market?

a) Attempt to collude with other producers

b) Compete on price

c) Gain market share

d) Continue to differentiate the product

2. Suppose there are three commercial concrete suppliers that account for 90% of sales (of nearly identical products) in northern New England. What is the most important thing they can do to earn profits in the commercial concrete industry?

a) Compete on price

b) Differentiate the product

c) Collude

d) Gain market share

Explanation / Answer

a) "D"

The smartphone maker like Apple should continue to differentiate its product to make a profit in the market.

b) "C"

Collude and form a cartel which will increase the profit of all the three suppliers.

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