Multiple Choice
When two firms interact in an oligopolistic market, which of the following is most likely to occur?
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14. Oligopoly
Characteristics of Oligopoly
Multiple Choice
Which of the following industries is an illustration of a homogeneous oligopoly?
A
Crude oil production
B
Fast food restaurants
C
Automobile manufacturing
D
Clothing retail
Verified step by step guidance1
Understand the concept of a homogeneous oligopoly: it is a market structure where a few firms dominate the industry and produce essentially identical or very similar products.
Analyze each industry option to determine if the products are homogeneous (identical) or differentiated (different in features, branding, or quality).
Crude oil production is typically considered a homogeneous product because crude oil from different producers is largely interchangeable and standardized.
Fast food restaurants, automobile manufacturing, and clothing retail involve differentiated products, where firms compete on features, branding, and quality rather than producing identical goods.
Conclude that the industry best illustrating a homogeneous oligopoly is crude oil production, as it fits the criteria of few firms producing a standardized product.
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