When General Motors introduced a promotion offering customers the employee discount prices for any vehicle, Chrysler and Ford followed the trend and offered the same program. This intense price competition among the three major automobile producers resulted in lower profits for all three companies. This outcome illustrates a problem for firms in what type of economic structure?
A) monopolistic competition
B) oligopolistic markets
C) pure monopoly
D) pure competition

Question

Quizplus · Accepted Answer

This situation indicates an oligopolistic market structure, where a few dominant firms compete heavily and follow each other's pricing strategies. The price competition often results in lower profits for all firms.

When General Motors Introduced a Promotion Offering Customers the Employee