question archive Which of the following correctly describes an oligopoly? A
Which of the following correctly describes an oligopoly? A
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Which of the following correctly describes an oligopoly?
A. A single firm has all of the market power
B. Several firms have market power and there are free entry and exit.
C. Several firms have market power and there are barriers to entry.
D. Several firms take the price as given and there are free entry and exit.
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The correct answer is (c).
Various characteristics of oligopoly market structure are that it comprises of few firms that have the market power. Secondly, it is difficult for a new firm to join the market since entry barriers are high. Small firms can also not compete since the existing firms are enormous, and they do enjoy economies of scale.
