An important characteristic of an oligopoly market structure is that:
A)there are a large number of firms in the industry that produce identical products
B)products typically sell where price is equal to the marginal cost of production
C)the actions of one seller can have a large impact on the profitability of other sellers
D)the actions of one seller can have no impact on the profitability of other sellers because the market is so large

Question

Quizplus · Accepted Answer

In an oligopoly market structure, there are a small number of firms that dominate the market. Therefore, the actions of one seller can have a large impact on the profitability of other sellers. This is because there are only a few firms that control most of the market share and any decision made by one firm can affect the prices and sales of the others.

An Important Characteristic of an Oligopoly Market Structure Is That