Question

Oligopoly is a common form of big business in America. Automobiles, soft drinks, fast food franchises, cigarettes, beer, and cell phone services all fall into the category of oligopoly.

a. What are the characteristics of an oligopoly? List and explain the three most important characteristics.

b. Many oligopolies are successful in earning economic profit year after year. Identify and explain what characteristic of oligopoly is most responsible for the presence of long-run economic profits.

c. Many oligopolies sell differentiated products. List and explain three ways in which the firm may attempt to differentiate its product and explain why the firm would wish to differentiate its product.

Answer 1

Answer: Giren, information of oligopoly. @ characteristics of an oligopoly: oligopoly: is a market structure characterised by the •Presence of a few large fims who produced homogeneous or differentiated products intensdy competing against each other and recognising interdependence in their decisin-making, under this type of market; prices are normally rigidas fins are afraid of immediate reactions of the rival firms which may start price war. ☺ A few firms? A few films, but large in size, dominate the market for a commodity. Each fim Commands a Significant share of the market and it can impact the market price of the product W Barries & There are various barriers to the entry

of new firms. These barriers are almost similar to those under monopoly. • Entry of new fims is extremely difficult, if not impossible (1) High degree of inter dependence. There is a high degree of interdependence between firms price and op policy of one firms is significantly impacts the price and output policy of the rival time in the market. 6 characteristics of oligopoly that are most responsible for the presence of long run clonomic profits: formation of cartels with a view to avoiding Competitim firms may forms cartel. It is a formal, @q greement among the fims to avoid competitim . It is a situation of collusive oligopoly. firm in long run. This increased profit of oligopoly ( 3 ways in which firm may attempt to differentiate

its product and why Product of oligopolies is differentiated in terms of brand names, quality of product used, color of product. Examples: car of masuti, Tata, fiat, ford etc.. time wish to differentiate its product so that they Can import the market price of the product

Answer 2

the answer is there is no answer