Multiple Choice
Oligopolies are not considered a desirable market structure because they tend to achieve which of the following outcomes?
91
views
14. Oligopoly
Characteristics of Oligopoly
Multiple Choice
Producers operating in oligopolistic markets generate:
A
perfectly competitive outcomes with many sellers
B
interdependent pricing strategies due to a small number of firms
C
no barriers to entry for new firms
D
products that are always identical and undifferentiated
Verified step by step guidance1
Understand the characteristics of an oligopolistic market: it is a market structure dominated by a small number of firms, which makes each firm's decisions affect the others.
Recognize that in oligopolies, firms are interdependent, meaning each firm must consider the potential reactions of its competitors when making pricing and output decisions.
Recall that perfectly competitive outcomes occur in markets with many sellers and no single firm can influence the market price, which is not the case in oligopolies.
Note that barriers to entry often exist in oligopolistic markets, preventing easy entry of new firms, unlike in perfectly competitive markets where there are no barriers.
Understand that products in oligopolies can be either differentiated or identical, so it is incorrect to say they are always identical and undifferentiated.
Related Videos
Related Practice
