NISM Certifications · NISM-Series-XV: Research Analyst · Industry Analysis
An analyst studying a cement industry finds that a few large players dominate, products are undifferentiated, and capacity additions are lumpy and expensive. Which market structure does this most closely describe?
It describes an oligopoly. A few large firms dominate, entry needs heavy capital, and firms' pricing decisions depend on each other. Perfect competition and monopolistic competition have many sellers, while a monopoly has only one seller.
- APerfect competition
- BOligopolyCorrect
- CMonopolistic competition
- DPure monopoly
Explanation
A few dominant firms, high capital requirements and interdependent pricing decisions are hallmarks of an oligopoly. Perfect competition has many small firms, and a monopoly has a single seller. Monopolistic competition has many firms with differentiated products.
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