alleryStart learning →Which two characteristics define an oligopoly?
AMany small firms, and products that are almost identical
BOne firm only, and entry blocked by a government order
CMany firms, and products that are close but differing substitutes
DA few firms producing most output, and factors limiting their number
Answer & Solution
Correct answer: D. A few firms producing most output, and factors limiting their number
1. An oligopoly has two defining characteristics.
2. A few firms produce most or all of the output of the industry.
3. Large capital requirements or other factors limit the number of firms that can enter.
4. Steel, automobiles, airlines and aircraft manufacture are the examples given.
5. Many small firms with near-identical products describe perfect competition, and a single protected firm is a pure monopoly.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 1 "Understanding Economic Systems and Business", section 1.7 Competing in a Free Market_
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