Which of the Following Is a Difference Between an Oligopoly

question 23

Multiple Choice

Which of the following is a difference between an oligopoly with homogeneous products and an oligopoly with differentiated products?

• A) There are a large number of sellers in an oligopoly with homogeneous products, while there are only a few sellers in an oligopoly with differentiated products.
• B) Firms in an oligopoly with homogeneous products earn positive economic profits in equilibrium, while firms in an oligopoly with differentiated products earn zero economic profits in equilibrium.
• C) There are huge barriers to entry in an oligopoly with homogeneous products, while there are no barriers to entry in an oligopoly with differentiated products.
• D) Firms in an oligopoly with homogeneous products earn zero economic profits in equilibrium, while firms in an oligopoly with differentiated products earn positive economic profits in equilibrium.

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Definitions:

SRMC

Short-Run Marginal Cost, which refers to the cost of producing one more unit of a good or service in the short term.

Acquired Firm

A company that has been purchased and taken over by another company.

Substitutes

are products or services that can replace or be used in place of another, catering to similar needs or functionalities, often influencing consumer choices and market dynamics.

Substitute Good

A product or service that can be used in place of another to satisfy similar needs or demands.