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An industry that is oligopolistic would be best characterized by:
A. The absence of significant economies of scale.
B. Significant barriers to entry.
C. One firm selling a product with no close substitutes.
D. Horizontal or flat demand curves for the output of individual firms.
Answer: B
Choice "b" is correct. Oligopoly market conditions are characterized by:
. Few firms in the market
. Significant barriers to entry
. Differentiated products
. Fixed (or semi fixed) prices
. Kinked demand curves
Choice "a" is incorrect. This is an example of monopoly.
Choice "c" is incorrect. Horizontal demand curves represent demand that is perfectly price elastic (buyers
will only pay one price for any quantity of a product). This occurs in perfectly competitive markets.
Choice "d" is incorrect. This is characteristic of perfect competition, as there are no barriers to entry ("size
doesn't matter") in perfect competition.

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