Which market form is characterized by a small number of competing firms?

Which market form is characterized by a small number of competing firms?

• A. Monopoly
• B. Oligopoly
• C. Perfect competition
• D. Duopoly

Answer: (B)

The market form distinguished by a small number of competing firms is oligopoly. In an oligopoly, the market is dominated by a few large firms that hold significant market share, which means that the actions of any single firm can directly influence the others and the overall market. This interdependence among firms is a key characteristic of oligopolistic markets. Oligopolies can result in a variety of pricing strategies and competitive behaviors, such as price wars or collusion. In such markets, barriers to entry can be high, making it difficult for new competitors to enter and challenge the established players. While there are other market structures, they do not match the specific characteristic of having a small number of firms. For instance, a monopoly involves a single firm dominating the entire market, perfect competition entails a large number of firms competing with identical products, and duopoly refers to a market structure with only two firms, which is a more specific case within the broader classification of oligopoly.

The market form distinguished by a small number of competing firms is oligopoly. In an oligopoly, the market is dominated by a few large firms that hold significant market share, which means that the actions of any single firm can directly influence the others and the overall market. This interdependence among firms is a key characteristic of oligopolistic markets.

Oligopolies can result in a variety of pricing strategies and competitive behaviors, such as price wars or collusion. In such markets, barriers to entry can be high, making it difficult for new competitors to enter and challenge the established players.

While there are other market structures, they do not match the specific characteristic of having a small number of firms. For instance, a monopoly involves a single firm dominating the entire market, perfect competition entails a large number of firms competing with identical products, and duopoly refers to a market structure with only two firms, which is a more specific case within the broader classification of oligopoly.