ECONOMICS
COMPETITION AND MARKET STRUCTURES
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
If a town has only one gas station then the market for gas in that town is in which market structure?
|
|
Perfect Competition
|
|
|
Monopolistic Competition
|
|
|
Oligopoly
|
|
|
Monopoly
|
Explanation:
Detailed explanation-1: -Examples of oligopolies can be found across major industries like oil and gas, airlines, mass media, automobiles, and telecom.
Detailed explanation-2: -The global oil market is considered an oligopoly market because the oil revenues are high compared to the costs of its production because the average fixed costs are higher than the average of variable costs.
Detailed explanation-3: -The price of gasoline is closely linked to the price of oil, which is a component of gasoline, thus as the price of oil falls, the price of gasoline typically will fall. The monopolistic firm has the ability to control the price as they desire, due to the market power they possess.
There is 1 question to complete.