There is a large capital requirement needed to set up a tire manufacturing operation. What type of market structure do tire manufacturers operate in?
A) perfect competition
B) oligopoly
C) imperfect competition
D) monopolistic competition

Question

Quizplus · Accepted Answer

Tire manufacturers operate in an oligopoly market structure. This is because there are only a few large companies dominating the market and barriers to entry are high due to the high capital requirement needed to set up a tire manufacturing operation. This results in limited competition and the ability for these companies to control prices and output levels.

There Is a Large Capital Requirement Needed to Set Up