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Which of the following is not a feature of oligopoly market?
- a)Interdependence of the firms in decision making
- b)Price rigidity
- c)Group behaviour
- d)Existence of large number of firms.
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
Which of the following is not a feature of oligopoly market?a)Interdep...
Not a feature of Oligopoly market:
Existence of large number of firms.
Explanation:
Oligopoly is a market structure where a few firms dominate the market. These firms have significant market power, and their actions can influence the market's price and output. The following are the features of an oligopoly market:
Interdependence of the firms in decision making: In an oligopoly market, firms are interdependent; they cannot make decisions independently without considering their rivals' reactions. For instance, if one firm decides to lower its prices, its rivals may follow suit, leading to a price war.
Price rigidity: Oligopoly firms tend to maintain price stability to avoid a price war. They do this by engaging in non-price competition such as advertising, branding, and product differentiation.
Group behaviour: Oligopoly firms may collude to increase their market power or engage in strategic behaviour to outcompete their rivals. For instance, they may agree to fix prices, limit output, or divide the market.
Existence of a few firms: Oligopoly markets have a few large firms that dominate the market. These firms have significant market power, and their actions can influence the market's price and output.
Therefore, the correct answer is option D (Existence of large number of firms) since the oligopoly market structure is characterized by a few large firms and not a large number of firms.
Existence of large number of firms.
Explanation:
Oligopoly is a market structure where a few firms dominate the market. These firms have significant market power, and their actions can influence the market's price and output. The following are the features of an oligopoly market:
Interdependence of the firms in decision making: In an oligopoly market, firms are interdependent; they cannot make decisions independently without considering their rivals' reactions. For instance, if one firm decides to lower its prices, its rivals may follow suit, leading to a price war.
Price rigidity: Oligopoly firms tend to maintain price stability to avoid a price war. They do this by engaging in non-price competition such as advertising, branding, and product differentiation.
Group behaviour: Oligopoly firms may collude to increase their market power or engage in strategic behaviour to outcompete their rivals. For instance, they may agree to fix prices, limit output, or divide the market.
Existence of a few firms: Oligopoly markets have a few large firms that dominate the market. These firms have significant market power, and their actions can influence the market's price and output.
Therefore, the correct answer is option D (Existence of large number of firms) since the oligopoly market structure is characterized by a few large firms and not a large number of firms.
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Community Answer
Which of the following is not a feature of oligopoly market?a)Interdep...
The correct answer is D: Existence of large number of firms.Explanation:An oligopoly market is a market structure characterized by a few dominant firms, each having significant control over the market. The key features of an oligopoly market include:A: Interdependence of the firms in decision making- In an oligopoly, the actions of one firm directly impact the other firms in the market. As a result, firms must consider the potential reactions of their competitors when making decisions, such as setting prices or launching new products.B: Price rigidity- Oligopolistic firms tend to avoid significant price changes to prevent a price war with their competitors. As a result, prices in an oligopoly market tend to be rigid or sticky, meaning they do not change frequently.C: Group behavior- Firms in an oligopoly market may engage in group behavior, such as forming cartels or engaging in collusion, to maximize their profits collectively. This can result in practices that restrict competition, such as price fixing or limiting production.D: Existence of large number of firms- This is not a feature of an oligopoly market. In an oligopoly, there are only a few dominant firms, as opposed to a large number of firms. This concentration of market power among a few firms is a key characteristic of oligopoly markets. In contrast, a large number of firms is a characteristic of a competitive market structure, such as perfect competition or monopolistic competition.
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Which of the following is not a feature of oligopoly market?a)Interdependence of the firms in decision makingb)Price rigidityc)Group behaviourd)Existence of large number of firms.Correct answer is option 'D'. Can you explain this answer?
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