14674
AssignmentMultiple Choice

Market Structures and Competition

Question 14674 • 2102320-Economics HONORS - Edgenuity Teacher

Which situation could be the best example of an oligopoly?

Answer
A
A new producer of power tools has entered the market and is relying on low prices to attract consumers.
B
A new producer of a smart phone operating system is trying to enter the market but cannot because most cell phone makers use one of two popular operating systems.
C
A new producer of running shoes is trying to enter the market but cannot because of an existing patent.
D
A new producer of tires has entered the market and found that demand is already being met.

Explanation

An oligopoly is a market dominated by a small number of large sellers, which can make it difficult for new firms to enter. In choice B, most phone makers use one of just two popular operating systems, so the market is concentrated and a new producer struggles to enter. Choice C describes a barrier caused by a patent, not necessarily an oligopoly.

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