Question

oligopoly is a market structure characterized by: a regulated natural monopolies. b independence in decision making. c strategic behavior between rival firms. d a large number of small firms. e substantial diseconomies of scale.

Answer 1

Oligopoly is a market structure characterized by: C. strategic behavior between rival firms.

What is an oligopoly?

An oligopoly can be defined as a type of market structure which comprises a small number of business firms or sellers that are offering identical or similar products to their consumers, in such a way that none of them can limit the significant influence of the other.

The characteristics of oligopoly.

Generally, an oligopoly is a market structure that is distinguished by several characteristics and these include the following:

1. Mutual interdependence between business firms.  
2. The market is controlled by many small business firms.
3. Strategic behavior between competitors (rival firms).
4. Difficult entry to new business firms.
5. Substantial economies of scale.
6. Dependence in decision making.

In this context, we can reasonably infer and logically deduce that business organizations or sellers that are operating in an oligopoly are characterized by making strategic behavior between competitors (rival firms).

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