Question

market structures:
2
select the correct answer.
jack, jamie, ronnie, and stephan own the only computer software manufacturing companies in the country. when jack increases the price of his product and advertises extensively to promote it, the other three manufacturers immediately increase their prices and launch promotional strategies.
what type of market structure do these four companies operate in?
a. oligopoly
b. monopolistic competition
c. monopoly
d. perfect competition
e. natural monopoly

Explanation:

• Oligopoly: In an oligopoly, there are a few firms dominating the market. The actions of one firm (like Jack increasing price and advertising) affect the others (Jamie, Ronnie, Stephan responding by increasing prices and launching promotions).
• Monopolistic competition: Has many firms, not just a few.
• Monopoly: Only one firm.
• Perfect competition: Many firms with no influence on each other.
• Natural monopoly: Usually one firm due to cost - scale advantages (not the case here).

Answer:

A. oligopoly