Table of contents

0. Basic Principles of Economics1h 5m
1. Reading and Understanding Graphs59m
2. Introductory Economic Models1h 10m
3. The Market Forces of Supply and Demand2h 26m
4. Elasticity2h 26m
5. Consumer and Producer Surplus; Price Ceilings and Floors3h 45m
6. Introduction to Taxes and Subsidies1h 46m
7. Externalities1h 12m
8. The Types of Goods1h 13m
9. International Trade1h 16m
10. The Costs of Production2h 35m
11. Perfect Competition2h 23m
12. Monopoly2h 13m
13. Monopolistic Competition1h 9m
14. Oligopoly1h 26m
15. Markets for the Factors of Production1h 26m
16. Income Inequality and Poverty35m
17. Asymmetric Information, Voting, and Public Choice39m
18. Consumer Choice and Behavioral Economics1h 16m

14. Oligopoly

Characteristics of Oligopoly

Microeconomics

14. Oligopoly

Characteristics of Oligopoly

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Multiple Choice

An example of oligopoly is:

Wheat farming

The clothing industry

The restaurant industry

Cellular phone service

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Verified step by step guidance

Understand the concept of an oligopoly: An oligopoly is a market structure characterized by a small number of firms that have significant market power, but not complete control over the market. These firms are interdependent, meaning the actions of one firm can significantly impact the others.

Identify the characteristics of an oligopoly: Key features include a few dominant firms, barriers to entry, product differentiation (or homogeneity), and strategic interactions among firms.

Analyze each industry option: Consider the number of firms, market power, and the level of competition in each industry. For example, wheat farming typically involves many small producers, which is more characteristic of perfect competition.

Evaluate the cellular phone service industry: This industry is often dominated by a few large firms, such as Verizon, AT&T, and T-Mobile in the United States, which have significant market power and influence over prices and services.

Conclude why cellular phone service is an oligopoly: The cellular phone service industry fits the oligopoly model due to the presence of a few dominant firms, high barriers to entry (such as infrastructure costs and regulatory requirements), and strategic interactions among the firms.