What is one of the main differences between a monopoly and an oligopoly?

A. Oligopolies face downward sloping demand curves, unlike monopolistic firms. B. An oligopoly is a market situation where there are no close substitutes for the good.

C. Firms in oligopoly can set prices to a degree but must consider other firms' decisions.

D. There are barriers to entry for firms in a monopolistic but not in oligopolistic markets.

Question

Social Studies

Kendall Howell

8 September, 06:09

What is one of the main differences between a monopoly and an oligopoly?

A. Oligopolies face downward sloping demand curves, unlike monopolistic firms. B. An oligopoly is a market situation where there are no close substitutes for the good.

C. Firms in oligopoly can set prices to a degree but must consider other firms' decisions.

D. There are barriers to entry for firms in a monopolistic but not in oligopolistic markets.

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Answers (1)

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Kai Nolan · Answer 1

C. seems to be the closest to the correct answer.

C gets close to the analysis that collusion is common in oligopolies as collusion is (illegal) but easier than competition

A is incorrect as oligopoly has a kinked, not downward sloping curve.

Oligopoly is a market structure where there are limited options for producers, but there are options. So, B is incorrect.

There are barriers to entry in both monopolies and oligopolies so D is incorrect.