What is an oligopoly?

Understanding Oligopoly Markets

Quiz
•
Other
•
10th Grade
•
Easy
julia thomson
Used 4+ times
FREE Resource
15 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
A market with many small firms
A market where a few large firms control the majority
A market with only one firm
A market with perfect competition
Answer explanation
An oligopoly is characterized by a market dominated by a few large firms, which have significant control over prices and production. This distinguishes it from markets with many small firms or a single firm.
2.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
Which of the following is a main feature of an oligopoly?
Many small firms
No barriers to entry
Few large firms dominate the market
Identical products
Answer explanation
An oligopoly is characterized by a market dominated by a few large firms, which can influence prices and output. This contrasts with many small firms or no barriers to entry, making 'Few large firms dominate the market' the correct choice.
3.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
What is meant by 'barriers to entry' in an oligopoly?
Easy for new companies to enter the market
High costs or strict regulations make it difficult for new companies to enter
No restrictions for new companies
Only small firms can enter the market
Answer explanation
'Barriers to entry' in an oligopoly refer to high costs or strict regulations that make it difficult for new companies to enter the market, protecting existing firms from competition.
4.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
How do companies in an oligopoly often compete without changing prices?
By reducing product quality
Through non-price competition like advertising and promotions
By increasing prices
By merging with other companies
Answer explanation
In an oligopoly, companies often engage in non-price competition, such as advertising and promotions, to attract customers without altering prices. This strategy helps maintain market stability while differentiating their products.
5.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
What is 'collusion' in the context of an oligopoly?
Companies independently setting prices
Companies secretly agreeing to control prices or markets
Companies competing fairly
Companies lowering prices to attract customers
Answer explanation
In an oligopoly, 'collusion' refers to companies secretly agreeing to control prices or markets, undermining competition. This is different from independent pricing or fair competition, making the correct choice about collusion clear.
6.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
Which of the following is a disadvantage of an oligopoly for consumers?
High level of product variety
Limited choice compared to more competitive markets
Low prices due to competition
High level of innovation
Answer explanation
In an oligopoly, a few firms dominate the market, leading to limited choices for consumers compared to more competitive markets where many firms offer diverse products.
7.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
What might companies in an oligopoly do to attract customers besides lowering prices?
Reduce product quality
Increase advertising and promotions
Stop producing new products
Increase prices
Answer explanation
In an oligopoly, companies can attract customers by increasing advertising and promotions to differentiate their products and enhance brand loyalty, rather than just competing on price.
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