Oligopoly Homework Solutions

Best Oligopoly Homework Solutions Which Can Really Benefit the Students

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Understanding the economic structure of the whole market, it is important to understand the various types of factors present in it. Oligopoly form of the market is difficult to grasp due to their complicacy and features. Thus the whole base of the market has to be clear for the students.

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What is the oligopoly system?

An oligopoly can be defined as a market structure where there is a just a limited number of firms present. There is no level of competition present between the firms and none of them has significant influence over the market. This is a structure where only a few firms dominate the entire market structure.

Oligopoly system may be defined as the concentrated ratios where only there is a limited measure of whole proportion in the total market. It arises a hypothetical condition between the firms where only few firms can hold a bit from the actual share. An oligopoly can be defined by the oil refineries, railroads, manufacturing companies and other grocery store chains.

Is the oligopoly system in the market really stable?

An oligopoly is definitely a stable form of market structure. The firms who allocate all their resources together don’t have to compete against each other. This can save the cost of economic war and help fill proper utilization of resources by all the firms. Cheating is also avoided which forms the prime cause of economic war.

Price fixing and collusion in the market are accepted by the government in the oligopoly market. Since economic war can be caused by the changing of prices and fluctuations in the market, the oligopoly system can solve the differences. These oligopoly market structure also creates branding and other forms of product differentiation so that the market share can be increased.

What are the features of the oligopoly system of market?

Oligopoly market structure is definitely different from the other forms of market. Here are some of the few features of this market structure listed in the following points.

  • Interdependence

Since there are only a few firms, there is interdependence of the individual firms. All the firms can depend on their own growth rate and focus on their individual buying and selling. There is also interdependence in the decision making of the firms.

  • Advertisement of Different Firms

Under this system of oligopoly, a major number of firms would like to affect their dominance or other forms of other firms. Therefore, the rival firms are always aware of the other firms and their movements on tasks. Advertising can be termed as the key element for an oligopolist. A firm under this structure can advertisement and boost their campaign through smart means.

  • Competition

There is a high level of competition present in the oligopolistic market. Since there are only a number of sellers and a lot of buyers, there are immediate effects from one firm to the other. One seller always has to alert about the other seller’s motives and keep in contact so that a fine check is confirmed on them.

  • Close Entry of Firms

As there is a high level of competition in the market, there is also a barrier to the entry of new firms into the market. In the long-run, these barriers help in restraining the new firms to enter.

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