Question

1. What comprises the oligopoly market?

a.	Companies selling services only	b.	A few larger firms
c.	Many small firms	d.	One firm

2.Regarding sunk costs, which of the following is not true?

a.	Sunk costs are not relevant to the firm’s decisions after it has entered the market.	b.	Sunk costs, although likely to be important in guiding the decisions of firms, are unlikely to be influential on market structure.
c.	Sunk costs are an important factor in determining entry into a market because sunk costs cannot be recouped.	d.	Sunk costs are an important factor in determining entry into a market because these costs may be quite high.

3, Of the following, which would be considered to be true if companies use game theory?

a.	All must follow the same rules.	b.	Business decisions are based upon what is believed to be your competitor’s decision.
c.	All players discuss all decisions.	d.	The winner gets to go first in the next game.

4. Although oligopolies face constraints like other markets, which of the following is one difference?

a.	It faces a vertical demand curve.	b.	It faces a horizontal demand curve.
c.	It faces reactions of rival firms.	d.	It faces a positively sloped demand curve.

Answer 1

Question 1  What comprises the oligopoly market?

Option B - A Few larger firms

because in oligopoly, there are large barriers to entry in a market. so there are only few firms are exist in the market. And there are highly mutual interdependence exist between these exist firms.

For example in Automobile industry.there are fer larger firms exist in the market with homogeneous or some different types of product. in Oligopoly, all the existing firms observe their decisions can affect the competitors.