In the middle of the mountains in northern BC, 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 which type of market structure?
A) oligopoly
B) monopoly
C) perfect competition
D) imperfect competition

Question

Quizplus · Accepted Answer

An oligopoly is a market structure in which a small number of firms dominate the market and compete with each other for customers. In this scenario, there are only five service stations in the area, which suggests a small number of firms. Additionally, the fact that one service station's actions affect the others implies that they are in competition with each other. Therefore, an oligopoly best fits the description of the market structure in this scenario.

In the Middle of the Mountains in Northern BC, There