Full question:
In the middle of the desert in Arizona, there are five service stations competing for all the business that exists in this isolated location. When one service station lowers its price on gas, all must follow suit. These service stations are operating in a(n) _____ market structure.
A. Oligopoly
B. Monopoly
C. perfect competition
D. imperfect competition
Answer:
These service stations are operating in a(n) Oligopoly market structure.
Explanation:
Oligopoly is when a little quantity of firms cooperate, each devising nothing merely hinted or hinted without acting undeviatingly, to regulate production and/or fixed rates, to gain above typical market revenues. Organizations in an oligopoly set costs, collectively – in a cartel – or beneath the power of one firm, rather than using prices from the market.
There is no specific above limit to the number of firms in an oligopoly, but the judgment must be level quite that the efforts of one firm significantly impact the others.
There are different kinds of market. These service stations are operating in a(n) oligopoly market structure.
Oligopoly is often known to occur when a small number of large companies have almost all of the sales in an industry.
An Examples of oligopoly market structure are the auto industry, cable television, etc. Oligopolistic firms are compared to cats in a bag.
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