Answer to Question #310200 in Microeconomics for joseph

Question

What is an oligopoly? In oligopoly markets, how do businesses make decisions?

Answer 1

Answer.

An oligopoly is a structure in a market consisting of very small in size firms that hinder other firms from having influence on them. measure of the shares of the large firms refers to concentration ratio.

In oligopoly,decisions are made by their production department and that of other firms altogether. An example of model used is the game model theory whereby when a firm makes a decision it takes into consideration all the possible responses from other firms.