Why Might Only a Few Firms Dominate an Oligopolistic Industry

question 23

Multiple Choice

Why might only a few firms dominate an oligopolistic industry?

• A)A natural or legal barrier to entry exists.
• B)Perfectly elastic demand makes small-scale operation economically inefficient.
• C)Decreasing returns to scale may make small-scale firms more advantageous.
• D)Inelastic market demand leads to the domination of the industry by a few firms.
• E)It is due to the outcome of the prisoners' dilemma.

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Definitions:

Plumule

The part of a seed embryo that develops into the shoot bearing the first true leaves of a plant.

Monocot

A group of flowering plants that have a single embryonic leaf, or cotyledon, in their seeds.

Coleoptile

The protective sheath covering the emerging shoot in monocotyledons, such as grasses and cereals.

Ovary Wall

The outer layer of the ovary that encloses the ovules in plants or the area in female animals where eggs are produced.