Question

Which three of the following characteristic apply to oligopoly?
I. Each firm faces a downward sloping demand curve.
II. A few large firms account for a high percentage of industry output.
III. Many small firms account for a high percentage of industry output.
IV. Each firm faces a horizontal demand curve.
V. The industry is often characterized by extensive non-price competition.
Select the correct answer from the option given below -

• A. III, IV & II
• B. II, I & V
• C. I, III & V
• D. V, II & IV

Answer 1

The correct option is B II, I & V

Oligopoly is a market structure where few firms dominate. Following are the characteristics of oligopoly:

1. A few large firms account for a high percentage of industry output.
2. Each firm faces a downward sloping demand curve.
3. The industry is often charcterized by extensive non-price competition.