Oligopoly is a market structure that is characterized by a:
A) small number of interdependent firms producing identical or differentiated products.
B) small number of independent firms producing identical or differentiated products.
C) large number of relatively small independent firms producing differentiated products.
D) large number of relatively small independent firms producing identical products.

Question

Quizplus · Accepted Answer

Oligopoly is characterized by a small number of interdependent firms, meaning that the actions of one firm can have a significant impact on the others. These firms may produce identical products, as in the case of a homogeneous oligopoly (e.g. oil producing companies), or differentiated products, as in the case of a differentiated oligopoly (e.g. automobile manufacturers). Option A is the only choice that accurately describes the characteristics of an oligopoly.

Oligopoly Is a Market Structure That Is Characterized by A