Understanding Oligopoly

What does the word 'oligopoly' mean?

• A market structure with a small number of firms that have significant market power.

• A market with no firms and no competition.

• A type of monopoly with only one firm.

• A market structure with many firms competing equally.

How many firms are usually in an oligopoly?

• 2 to 10 firms

• 1 to 3 firms

• More than 20 firms

• 10 to 20 firms

What is one example of an oligopoly?

• Textile industry

• Fast food industry

• Automobile industry

• Bicycle industry

What do firms in an oligopoly have to be careful about?

• The actions of competitors and potential market reactions.

• The influence of government regulations in a free market.

• The cost of production in a perfectly competitive market.

• The preferences of consumers in a monopoly.

Why do firms in an oligopoly advertise a lot?

• Firms in an oligopoly advertise a lot to differentiate their products and compete for market share.

• To increase brand loyalty among existing customers.

• To reduce production costs and increase profits.

• To comply with government regulations on advertising.

What happens if one firm changes its price?

• The firm's price change can affect competitors' pricing, consumer demand, and market dynamics.

• Consumer demand remains unchanged regardless of price adjustments.

• The firm's price change has no impact on the market.

• Competitors will always match the price change immediately.

Can firms easily leave an oligopoly?

• Yes, firms can leave an oligopoly at any time.

• Firms can easily exit an oligopoly with minimal costs.

• Oligopolies have no barriers preventing firms from leaving.

• No, firms cannot easily leave an oligopoly.

What type of products can oligopoly firms sell?

• Oligopoly firms can sell homogeneous or differentiated products.

• No products at all

• Only differentiated products

• Only homogeneous products

Do oligopoly firms work together?

• Yes, oligopoly firms can work together.

• Oligopoly firms cannot collaborate under any circumstances.

• Yes, but only in monopolistic markets.

• No, oligopoly firms always compete.

What is a key feature of an oligopoly?

• Firms have no influence on prices.

• A single firm controls the entire market.

• A small number of firms dominate the market.

• Many firms compete with no market power.