Which of the following is a characteristic of oligopolistic markets?

• A. A few large firms dominate the market
• B. Products are always perfectly differentiated
• C. There are no barriers to entry or exit
• D. Firms are price takers with no market power

Answer: (A)

Verified step by step guidance

1. Understand the definition of an oligopolistic market: it is a market structure characterized by a small number of large firms that dominate the industry.
2. Recall that in oligopolies, firms have significant market power, meaning they can influence prices rather than being price takers.
3. Recognize that products in oligopolistic markets can be either differentiated or homogeneous, so products are not always perfectly differentiated.
4. Note that there are typically high barriers to entry or exit in oligopolistic markets, which prevent new firms from easily entering or leaving the market.
5. Conclude that the key characteristic of oligopolistic markets is that a few large firms dominate the market, which aligns with the correct answer.