Which of the following is an assumption of the theory of oligopoly?
A)There no significant barriers to entry.
B)There are many sellers and many buyers.
C)Firms produce and sell either homogeneous or differentiated products.
D)There is a single seller in the market.

Question

Quizplus · Accepted Answer

The theory of oligopoly assumes that firms produce and sell either homogeneous or differentiated products. This is a key characteristic of oligopolies, where a small number of large firms dominate the market and have significant influence over prices and output levels. Options A, B, and D are not assumptions of the theory of oligopoly. Option A is actually a characteristic of perfect competition, where there are no barriers to entry. Option B is more associated with a market structure of monopolistic competition, where there are many sellers with differentiated products. Option D describes a monopoly, where there is only one seller in the market.

Which of the Following Is an Assumption of the Theory