A firm in an oligopoly is similar to a monopoly in that
A) both firms do not face competition from others.
B) both firms could have significant market power and control over price.
C) both firms face very inelastic demand for their products.
D) both firms do not need to advertise.

Question

Quizplus · Accepted Answer

Both a firm in an oligopoly and a monopoly could have significant market power and control over price. However, in an oligopoly, there are a few competing firms, whereas in a monopoly, there is only one firm with no competition. Therefore, option A is incorrect. Option C is incorrect because the demand elasticity could vary across different industries and specific products within those industries. Option D is incorrect because both a firm in an oligopoly and a monopoly could benefit from advertising to maintain their market position and control over prices.

A Firm in an Oligopoly Is Similar to a Monopoly