CA Foundation · Business Economics · Price Determination in Different Markets
A market has 4 firms, each producing a homogeneous product, and entry of new firms is blocked by high barriers. Which market form does this describe?
This is an oligopoly, specifically a pure oligopoly. There are only a few sellers (four) and entry is blocked by high barriers, with a homogeneous product. Perfect and monopolistic competition need many firms with free entry, and monopoly requires a single seller.
- APerfect competition
- BMonopolistic competition
- COligopolyCorrect
- DMonopoly
Explanation
A few sellers (four) with barriers to entry indicate oligopoly. Perfect competition and monopolistic competition need many sellers and free entry. Monopoly has a single seller. A homogeneous product makes it a pure oligopoly.
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