Which of the following markets does not fit the characteristics of an oligopoly?
The market that does not fit the characteristics of an oligopoly is d. Fresh fruit. Oligopoly is a market structure characterized by a small number of large firms dominating the market. These firms have significant market power, and their actions can have a substantial impact on prices and competition.
Explanation:
What is an oligopoly?
An oligopoly is a market structure in which a small number of firms dominate the market and have significant market power. These firms are usually large and their actions can influence prices and competition in the market.
Characteristics of an oligopoly:
1. Small number of firms: Oligopolistic markets are typically dominated by a small number of large firms.
2. Significant market power: These firms have the ability to influence prices and competition in the market.
3. Interdependence: Firms in an oligopoly often exhibit interdependence, where their actions can trigger reactions from competitors.
4. Barrier to entry: Oligopolies often have barriers to entry that prevent new firms from easily entering the market.
Breakfast cereals, Cell phones, and Automobiles:
The markets for breakfast cereals, cell phones, and automobiles all fit the characteristics of an oligopoly.
- The breakfast cereal market is dominated by a few major players with strong brand recognition and significant market share.
- The cell phone market is also characterized by a small number of major players competing for market share.
- The automobile industry is typically considered an oligopoly, with a handful of large manufacturers dominating the market.
Fresh fruit:
Fresh fruit does not fit the characteristics of an oligopoly. The market for fresh fruit is typically characterized by a large number of small producers and sellers. There is more competition and less market power concentrated in the hands of a few large firms.
In conclusion, while breakfast cereals, cell phones, and automobiles fit the characteristics of an oligopoly, fresh fruit does not. An oligopoly is defined by a small number of firms with significant market power, while the market for fresh fruit is more competitive and decentralized.