Which of the following is a characteristic of oligopoly?

Question

Quizplus · Accepted Answer

Prices in an oligopoly tend to be above marginal costs because firms in an oligopoly have market power and can set prices higher than their costs in order to maximize profits. Choice A is incorrect because the pricing policies of one firm can have a significant impact on the pricing policies of other firms in an oligopoly. Choice B is also incorrect because an oligopoly typically has a high concentration ratio, meaning that a few firms dominate the market. Choice C is incorrect because firms in an oligopoly may compete on factors other than price, such as product differentiation or advertising. Choice E is incorrect because an oligopoly typically has a small number of large firms, not a large number of sellers.

Which of the Following Is a Characteristic of Oligopoly