NISM Certifications · NISM-Series-XV: Research Analyst · Industry Analysis
An industry has a very small number of large firms, high capital requirements for entry, and each firm's pricing decision strongly affects the others. Which market structure does this best describe?
This describes an oligopoly. A few large firms dominate, entry barriers such as heavy capital needs are high, and each firm's pricing affects rivals, making their decisions interdependent. Competitive and monopolistic structures have many sellers, while a monopoly has only one.
- APerfect competition
- BOligopolyCorrect
- CMonopolistic competition
- DPure monopoly
Explanation
A few large sellers with high entry barriers and interdependent pricing decisions is the hallmark of an oligopoly. Perfect and monopolistic competition have many sellers, and a pure monopoly has just one.
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