Which of the following market models is characterized by a fixed ratio of firms to market share, where each firm has a set proportion of the total market and there is little to no entry or exit?

• A. Oligopoly
• B. Monopoly
• C. Perfect Competition
• D. Monopolistic Competition

Answer: (A)

Verified step by step guidance

1. Understand the characteristics of each market model: Monopoly, Perfect Competition, Monopolistic Competition, and Oligopoly.
2. Recall that a Monopoly has a single firm controlling the entire market, so the ratio of firms to market share is not fixed but concentrated in one firm.
3. Recognize that Perfect Competition has many firms with no single firm having a significant market share, and firms can freely enter or exit the market, so the ratio is not fixed.
4. Note that Monopolistic Competition has many firms with differentiated products and free entry and exit, leading to changing market shares and no fixed ratio of firms to market share.
5. Identify that Oligopoly is characterized by a few firms that hold significant and relatively stable market shares, with little to no entry or exit, resulting in a fixed ratio of firms to market share.