Question:
Which of the following is necessarily a characteristic of an oligopolistic market?
(1) Free entry into and exit from the market
(2) A few large scale producers
(3) Only one producer of a good with no close substitutes
(4) A homogeneous product
(5) No opportunities for collusion between firms
Correct Answer:
(2)
Answer Explanation:
An oligopoly is fundamentally defined as a market structure dominated by a small number of large sellers (“a few large-scale producers”). Because there are only a few dominant firms, their pricing and output decisions are highly interdependent.
Topic: Market Structures Year: 2020
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