In an oligopoly, which of the following conditions exist?

• A. Entry and exit from the market are completely free and unrestricted.
• B. There are many small firms with no influence over market price.
• C. Firms produce identical products and have perfect information.
• D. A few large firms dominate the market and are interdependent in their decision-making.

Answer: (D)

Verified step by step guidance

1. Understand the definition of an oligopoly: It is a market structure characterized by a few large firms dominating the market.
2. Recognize that in an oligopoly, firms are interdependent, meaning the decisions of one firm affect the others, especially regarding pricing and output.
3. Note that entry and exit are typically restricted or difficult in an oligopoly, unlike in perfect competition where entry and exit are free.
4. Identify that products in an oligopoly can be either identical or differentiated, but the key feature is the small number of firms, not perfect information or many small firms.
5. Conclude that the correct condition for an oligopoly is 'A few large firms dominate the market and are interdependent in their decision-making.'