Multiple Choice
Why would oligopolists, as a group, generally be better off if they acted collectively rather than individually?
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14. Oligopoly
Characteristics of Oligopoly
Multiple Choice
Which of the following is a unique feature of an oligopolistic industry?
A
There are no barriers to entry
B
There is only one seller in the market
C
Firms produce identical products and have perfect information
D
Firms are interdependent in their decision-making
Verified step by step guidance1
Understand the characteristics of different market structures: perfect competition, monopoly, monopolistic competition, and oligopoly.
Recall that in perfect competition, there are many sellers, identical products, and no barriers to entry, while in monopoly, there is only one seller with high barriers to entry.
Recognize that in an oligopoly, there are few sellers, and a key feature is that firms are interdependent, meaning each firm's decisions affect the others.
Note that interdependence leads to strategic behavior, where firms must consider rivals' potential reactions when making pricing or output decisions.
Conclude that the unique feature of an oligopolistic industry is the interdependence of firms in their decision-making, distinguishing it from other market structures.
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