Question

1. Pick out an industry (automobile, airline, utilities, cell phone carriers, etc). Answer the three questions for this industry. Do the answers indicate that this industry is competitive or monopoly, or might it be some other market structure?

Answer 1

Characteristics of an Oligopoly Market structure

1) Few sellers in the market

2) High investment

3) Homogenous or a differentiated product

4) Price rigidity

5) Barriers of entry and exit

Automobile Industry

In an automobile industry only few sellers have an a good market share in the industry. investment is to high so the barriers of entry and exit is there. Not everyone can enter a automobile industry as there should be approval from government and other bodies.

Prices are rigid and all the sellers will sell a differentiated product but are similiar in nature. In an automobile industry not everyone will have a significant influence on the market in the long which is similar to Oligopoly Market.