The figure given below shows the revenue and cost curves of a firm. MC represents the marginal cost curve, AC the average cost curve, MR the marginal revenue curve, and AR the average revenue curve.Figure 9.4

-In contrast to both perfect competition and monopolistic competition, an oligopoly market structure is characterized by:
A)price discrimination.
B)a perfectly inelastic demand curve.
C)the presence of infinite number of firms.
D)the production of only differentiated products.
E)difficulty in the entry of new firms.

Question

The figure given below shows the revenue and cost curves of a firm. MC represents the marginal cost curve, AC the average cost curve, MR the marginal revenue curve, and AR the average revenue curve.Figure 9.4
 
-In contrast to both perfect competition and monopolistic competition, an oligopoly market structure is characterized by:
A)price discrimination. 
B)a perfectly inelastic demand curve. 
C)the presence of infinite number of firms. 
D)the production of only differentiated products. 
E)difficulty in the entry of new firms.

Quizplus · Accepted Answer

Oligopoly is characterized by a small number of large firms in the market, leading to difficulty in the entry of new firms. Price discrimination, a perfectly inelastic demand curve, and the production of only differentiated products are not exclusive to oligopoly and can also occur in other market structures. However, the presence of an infinite number of firms is a characteristic of perfect competition, not oligopoly.

The Figure Given Below Shows the Revenue and Cost Curves