Which one of the following characteristics applies to oligopolistic markets?
A)There is a large number of firms.
B)The absence of barriers to entry of firms.
C)Firms are large relative to the size of the market.
D)All firms are price takers.
E)Firms produce only differentiated products.

Question

Quizplus · Accepted Answer

Oligopolistic markets are characterized by a small number of large firms that dominate the market. These firms are mutually interdependent and their decisions are influenced by the actions of their competitors. The large size of these firms relative to the market means they have significant market power to affect prices and output levels. A) is incorrect because oligopolistic markets have a small number of firms, not a large number. B) is incorrect because oligopolistic markets often have significant barriers to entry, such as high capital requirements or economies of scale. D) is incorrect because oligopolistic firms have some degree of pricing power and are not price takers. E) is incorrect because oligopolistic firms may produce homogeneous or differentiated products.

Which One of the Following Characteristics Applies to Oligopolistic Markets