For an industry to be considered an oligopoly, it must have:
A)independence in decision making.
B)a perfectly elastic demand curve.
C)a small number of interdependent firms.
D)relatively easy entry and exit.

Question

Quizplus · Accepted Answer

An oligopoly is a market structure in which a small number of interdependent firms dominate the industry. These firms are aware of the actions and decisions of their competitors and often adjust their own strategies accordingly. Independence in decision making (Choice A) is not a necessary condition for an oligopoly, as the firms' decisions are often influenced by their competitors. A perfectly elastic demand curve (Choice B) is not characteristic of an oligopoly, as the firms have some degree of market power, allowing them to charge higher prices than in a perfectly competitive market. Relatively easy entry and exit (Choice D) is not typical of an oligopoly, as barriers to entry often exist that make it difficult for new firms to enter the market and compete. Therefore, the best choice is C - a small number of interdependent firms.

For an Industry to Be Considered an Oligopoly, It Must