What is oligopoly?

Question 18 options:

It is a market structure in which prices are always similar.

It is a market structure in which products are always similar.

It is a market structure in which a very few large sellers dominate the industry.

It is a market structure in which products are always different.

Answer: The answer is a market structure in which a very few large sellers dominate the market.

Explanation:

Oligopoly : This is a market structure in which there are few producers of product with close substitute. There are two forms of oligopoly which includes, oligopoly who produce homogenous goods and differentiated goods respectively. Since, the number of competitors in oligopoly is small the reactions of each producers are more important. They tend to look at the actions of other producers before taken a vital decision.

Oligopoly is a types of imperfect market structure which has the following features

When products are homogeneous there is no special preference, but when the products is branded the consumers have a choice.

A single price reigns where goods are the same. The reverse is the case where goods are heterogeneous goods.

Price cut are for the same product, while price cut can also occur through advertising war fought by competitors in the market. 7