The town of Utopia has three gas stations. The owners of these gas stations make decisions together about when to raise and lower gas prices. It would be difficult for another gas station to enter this market. Which market structure best describes the market for gas in Utopia?

COMPETITION AND MARKET STRUCTURES

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

A	Perfect competition
B	Monopolistic competition
C	Oligopoly
D	Monopoly

Explanation:

Detailed explanation-1: -Pure Monopoly A monopoly exists when there’s a single firm that controls the entire market. The firm and industry are synonymous. This firm is the sole producer of a product, and there are no close substitutes. Because there are no alternatives, the firm has the highest level of market power.

Detailed explanation-2: -Monopolistic competitors have an incentive to differentiate their products so customers have choices, but monopolies do not have this incentive. Monopolistic competitors & monopolies have the same amount of influence over the price of their products.

Detailed explanation-3: -What are the characteristics of oligopoly in economics? Oligopoly characteristics include high barriers to new entry, price-setting ability, the interdependence of firms, maximized revenues, product differentiation, and non-price competition.

There is 1 question to complete.

ECONOMICS (CBSE/UGC NET)

ECONOMICS

COMPETITION AND MARKET STRUCTURES