Exxon Mobil and Shell are two of the relatively few sellers in the oil-refining industry. Due to the tremendous capital investment required to enter this industry, these companies are insulated significantly from the threat of new competitive entrants and thus have considerable control over price. This market situation is referred to as a(n)
A) cartel.
B) monopoly.
C) natural monopoly.
D) oligopoly.
E) trust.

Question

Quizplus · Accepted Answer

The situation described is indicative of an oligopoly, where a small number of firms have significant control over the market and are insulated from potential new competitors due to high barriers to entry.

Exxon Mobil and Shell Are Two of the Relatively Few