{"id":199085,"date":"2025-03-10T17:56:28","date_gmt":"2025-03-10T17:56:28","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=199085"},"modified":"2025-03-10T17:56:29","modified_gmt":"2025-03-10T17:56:29","slug":"oligopoly-is-a-market-structure-characterized-by","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/03\/10\/oligopoly-is-a-market-structure-characterized-by\/","title":{"rendered":"Oligopoly is a market structure characterized by"},"content":{"rendered":"\n

Oligopoly is a market structure characterized by:
A) independence in decision making
B) a horizontal demand curve.
C) a small number of interdependent firms.
Di telatively easy entry and exit.<\/p>\n\n\n\n

The correct answer and explanation is :<\/strong><\/mark><\/p>\n\n\n\n

Correct Answer:<\/h3>\n\n\n\n

C) A small number of interdependent firms.<\/strong><\/p>\n\n\n\n

Explanation:<\/h3>\n\n\n\n

An oligopoly<\/strong> is a market structure where a small number of firms dominate an industry. These firms are highly interdependent<\/strong>, meaning the actions of one firm significantly impact the others. This interdependence is a key characteristic of oligopoly and differentiates it from other market structures such as perfect competition, monopoly, and monopolistic competition.<\/p>\n\n\n\n

Why C is Correct?<\/strong><\/h4>\n\n\n\n
    \n
  1. Few Large Firms<\/strong>: In an oligopoly, a small number of firms control most of the market share. Examples include the automobile, airline, and telecommunications industries.<\/li>\n\n\n\n
  2. Interdependence<\/strong>: Since there are only a few dominant firms, each firm must consider how its actions (such as changing prices, launching new products, or altering production levels) will affect competitors and how they will react.<\/li>\n\n\n\n
  3. Barriers to Entry<\/strong>: While not as high as in a monopoly, significant barriers (such as economies of scale, brand loyalty, and government regulations) prevent new firms from easily entering the market.<\/li>\n\n\n\n
  4. Price Rigidity<\/strong>: Firms in an oligopoly are often reluctant to change prices due to potential competitive responses. For instance, if one firm lowers prices, others may follow, leading to a price war.<\/li>\n\n\n\n
  5. Non-Price Competition<\/strong>: Since price wars can be damaging, firms engage in advertising, branding, and product differentiation to gain an advantage.<\/li>\n<\/ol>\n\n\n\n

    Why Other Options Are Incorrect<\/strong><\/h3>\n\n\n\n
      \n
    • A) Independence in decision-making<\/strong> \u2192 Incorrect. Firms in an oligopoly are interdependent; they consider competitors’ reactions when making decisions.<\/li>\n\n\n\n
    • B) A horizontal demand curve<\/strong> \u2192 Incorrect. This applies to perfect competition, where firms are price takers.<\/li>\n\n\n\n
    • D) Relatively easy entry and exit<\/strong> \u2192 Incorrect. Oligopolies have significant barriers to entry, making it difficult for new firms to enter.<\/li>\n<\/ul>\n\n\n\n

      Thus, the best answer is C) A small number of interdependent firms<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"

      Oligopoly is a market structure characterized by:A) independence in decision makingB) a horizontal demand curve.C) a small number of interdependent firms.Di telatively easy entry and exit. The correct answer and explanation is : Correct Answer: C) A small number of interdependent firms. Explanation: An oligopoly is a market structure where a small number of firms […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-199085","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/199085","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=199085"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/199085\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=199085"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=199085"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=199085"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}