Question

Sometimes reactions to prices in oligopolistic markets can result in _________

Answer 1

Answer:

a price war

Explanation:

An Oligopoly is when a small group of two or more companies dominates a market. Oligopoly firms may consent to market collusion, and create barriers to new commerce entry. If the businesses do not, they will probably be forced to lower their prices and open the market to new and smaller companies.

It is the type of competition between the company selling the similar type of product , or rival companies who tries to reduce the price of the product strategizing in a way to apprehend the wider area of the market , is known as a price war .

In the event one of the firms forming the oligopoly decides to lower prices, a price war occurs breaking the balance of the oligopoly and destabilizing the equilibrium of demand and supply in that market.

Reduction of the price of any goods or commodity is considered to be one of the best method to increase its market share ,because as soon as the price of any good decreases , the sales automatically increases , as the consumers are always in search of some discounts and good deals .

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