Which situation could be the best example of an oligopoly?

1) A new producer of power tools has entered the market and is relying on low prices to attract consumers.

2) A new producer of computers has entered the market and found that advertising is more useful than lowering prices.

3) A new producer of running shoes is trying to enter the market but cannot because of an existing patent.

4) A new producer of tires has entered the market and found that demand is already being met.

Oligopoly is the type of market that has few number of firms but controls the market for a certain service or product. An example would be the auto industry - Chrysler, GMC, and Ford. So the best example in the question above is 2. Since it is setting a price to maximize output level rather than lowering the price.

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bihariyadeep28 bihariyadeep28 · Answer 2 · 2022-02-01T00:19:58-05:00

The market is ruled either by consumers or by producers. Their are many forms of market which can be classified on the basis of size, competition, output and market control like monopoly , duopoly, oligopoly etc.

What is the oligopoly?

The market condition where there are very few number of big producers who collectively enjoy the dominant position in the market and can determine and fix price of products, such market condition can be said as Oligopoly.

An example for oligopoly can be a firm which believes that creating market share and dominating the price determination is better than lowering the price for increasing sales.

Therefore, the situation where "a new producer of computers has entered the market and found that advertising is more useful than lowering prices" can be the best example of oligopoly and OPTION B is correct.

Learn more about oligopoly here:

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