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Which of the following best describes an oligopoly?
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14. Oligopoly
Characteristics of Oligopoly
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In an oligopolistic market, how would you best describe the extent of consumer choice?
A
Extensive
B
Infinite
C
Nonexistent
D
Limited
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Step 1: Understand the nature of an oligopolistic market, which is characterized by a few large firms dominating the market.
Step 2: Recognize that because there are only a few firms, the variety of products or services available to consumers is restricted compared to more competitive markets.
Step 3: Recall that consumer choice in such markets is not nonexistent, since there are still some options, but it is not extensive or infinite either.
Step 4: Conclude that the extent of consumer choice in an oligopoly is best described as limited, reflecting the restricted but present options available.
Step 5: Summarize that limited consumer choice arises because firms in oligopolies may offer differentiated products but do not provide the wide variety seen in perfectly competitive markets.
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