Assume that there are only three sellers in the aluminium industry each producing identical aluminium sheets.Given that these three firms own all the known sources of aluminium,the _____ model of the market is most applicable to the aluminium industry.
A)oligopoly
B)monopoly
C)dominant firm model
D)monopolistic competition

Question

Quizplus · Accepted Answer

An oligopoly market structure is applicable in this scenario since there are only three firms producing identical aluminum sheets and these firms own all known sources of aluminum. This allows for the firms to have considerable control over the market and for strategic interactions between firms such as price fixing or collusion. A monopoly would only apply if there was only one seller in the market, while the dominant firm model only applies if one firm is significantly larger than the others. Monopolistic competition would apply if there were many small firms in the market producing slightly different products.

Assume That There Are Only Three Sellers in the Aluminium