In the middle of the desert in Arizona, there are five service stations competing for all the business that exists in this isolated location.When one service station lowers its price on gas, all must follow suit.These service stations are operating in a(n) _____ market structure.

Question

Quizplus · Accepted Answer

The scenario describes an oligopoly, a market structure characterized by a small number of firms whose decisions about prices and other market factors are interdependent. The fact that when one service station lowers its price, all others must follow suit indicates that the actions of any one firm significantly affect the others, a hallmark of oligopolistic competition.

In the Middle of the Desert in Arizona, There Are