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Questions and Answers
Which of the following best describes an oligopoly?
Which of the following best describes an oligopoly?
- A market with many small sellers who compete for market share
- A market with a few large sellers who control the industry (correct)
- A market with multiple sellers who collude to control prices
- A market with one dominant seller who controls the industry
What are some characteristics of oligopolistic markets?
What are some characteristics of oligopolistic markets?
- Differentiated products, many market participants, and elastic demand
- Differentiated products, few market participants, and inelastic demand
- Homogenous products, many market participants, and elastic demand
- Homogenous products, few market participants, and inelastic demand (correct)
How do firms in oligopolistic markets influence prices?
How do firms in oligopolistic markets influence prices?
- By manipulating the demand function
- By colluding with other firms to set prices (correct)
- By increasing production to lower prices
- By offering discounts and promotions
What is meant by the term 'mutually interdependent' in relation to firms in an oligopoly?
What is meant by the term 'mutually interdependent' in relation to firms in an oligopoly?
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Under what circumstances can oligopolies develop without collusion?
Under what circumstances can oligopolies develop without collusion?
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