Which of the following,if true,will be the best example of an oligopoly market?
A)The cigarette industry where a similar product is produced by a small number of sellers
B)Dine-in pizza outlets where a differentiated product is produced by a large number of sellers
C)The milk industry where a homogeneous product is provided by a large number of sellers
D)The market for electricity where a single firm can produce electricity at the lowest possible cost

Question

Quizplus · Accepted Answer

An oligopoly market is characterized by a small number of large firms producing similar products. The cigarette industry fits this description, as there are only a few large companies that produce similar cigarettes. Dine-in pizza outlets (B) and the milk industry (C) have a large number of sellers and either a differentiated or homogeneous product, which does not fit the characteristics of an oligopoly market. The market for electricity (D) may have a single firm producing electricity at the lowest possible cost, but it does not meet the requirement of having a small number of large firms producing similar products.

Which of the Following,if True,will Be the Best Example of an Oligopoly