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Which helps enable an oligopoly to form within a market?

Costs of starting a competing business are too high.
The government restricts market entry.
The number of options in a market confuses consumers.
No competition exists between producers.

Respuesta :

DukeMoseti

Costs of starting a competing business are too high

Oligopolies maintain their position of dominance in a market might because it is too costly or difficult for potential rivals to enter the market. These are obstacles that stop or prevent the entrance of a firm in a specific market


An Oligopoly forms within the market when the costs of starting a competing business are too high.

Further explanation

Oligopoly  

A market structure that is dominated by few firms thus there is limited competition.  

Assumptions

  • Products may identical or differentiated  
  • Firms maximize profit  
  • There is only few firms in the market  
  • There is barriers to market entry or exit  
  • Firms can set their prices  

Other types of market structures

Monopoly  

  • A type of market structure where there is a single producer and many buyers.
  • A single firm controls the market as it has the highest market power and consumers lack other options.  

Assumptions

  • Monopolist maximizes the profit  
  • Monopoly sets the price  
  • High barriers to exit and entry to the market  
  • A sole firm dominates and controls the market  

Perfectly competitive market  

  • This is a type of market structure that is hypothetical and is considered to have a very high level of competition.  

Characteristics of perfectly competitive market

  • No barriers of entry or exit to the market  
  • Goods produced by firms are identical  
  • Units of input such as units of labor are also identical  
  • A single cannot influence the market price or prevailing market conditions.
  • There are many buyers and sellers  
  • Buyers and sellers make normal profits in long run
  • Buyers and sellers are price takers  
  • There is perfect knowledge by the consumers and sellers

Monopolistic competition  

  • It is a market structure that has many small firms competing against each other.
  • These firms sell similar products that are slightly differentiated in terms of branding, packaging, etc.

Assumptions of monopolistic competition  

  • Free entry and exit to the market  
  • Products are differentiated  
  • Consumer’s preference is applicable  
  • All firms maximize profits  

Keywords: Oligopoly, market structure

Learn more about:

  • Oligopoly: brainly.com/question/8753703
  • Features of a Oligopoly: brainly.com/question/8753703
  • Types of market structures: brainly.com/question/8753703

Level: High school  

Subject: Business  

Topic: Market structures  

Sub-topic: Oligopoly

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