Question

If competitive market circumstances are such that there is some leader-follower price competition, some product differentiation, and the purpose of advertising is to inform, but avoid price competition, then we must be operating in a(n):

Answer 1

Oligipoly

Step-by-step explanation:

Oligopoly market is characterised by:

1. Few large firms

2. Firms set their prices together which is known as a cartel or through price leadership where a firm sets the market price.

3. Firms engage in advertisement.

4. Firms avoid price competition.

An example of an oligopoly is OPEC. OPEC is a cartel.