70.0k views
2 votes
Example - Top 4 firms in shampoo market: 10%, 8%, 12%, 10%

Option 1: Monopoly
Option 2: Oligopoly
Option 3: Monopolistic competition
Option 4: Perfect competition

User Merkost
by
8.3k points

1 Answer

2 votes

Final answer:

The correct market structure for a shampoo market dominated by a few firms with market shares like 10%, 8%, 12%, and 10% is an oligopoly, characterized by a small number of firms and strategic decision-making.

Step-by-step explanation:

The student is asking about different market structures, specifically trying to determine which market structure applies to a situation where the top four firms in the shampoo market have market shares of 10%, 8%, 12%, and 10%. Based on the information provided and the characteristics of the market structures, we can conclude that the appropriate term for a market dominated by a few firms which have significant control over it is an oligopoly. An oligopoly is characterized by a small number of firms dominating the market, high barriers to entry, and firms' strategic decision-making, which may include setting prices or levels of production based on the actions of competitors. This does not match the criteria for a monopoly (which is a single firm with no competition) or monopolistic competition (many firms selling similar but not identical products) or perfect competition (many firms selling identical products).

User Sciyoshi
by
7.1k points