Since the end of the war in the Persian Gulf,the world price of oil has fallen.But in some areas,consumers have seen little relief at the pump.This phenomenon can be explained by the theory of:
A) perfect competition.
B) monopolistic competition.
C) oligopoly.
D) monopoly.

Question

Quizplus · Accepted Answer

Oligopoly is the most appropriate theory to explain why consumers have seen little relief at the pump despite falling oil prices. In an oligopoly market structure, a few large firms dominate the market and have significant pricing power. In the case of the oil industry, a few large companies control the majority of the global oil supply, making it difficult for smaller firms to compete. Therefore, they can collude to keep prices higher than they would be in a perfectly competitive market. This explains why consumers have not seen significant relief in gasoline prices despite the fall in oil prices.

Since the End of the War in the Persian Gulf,the