Oligopolistic markets are least likely to have

CFA Level I Economics
#1

This is a question from a mock exam:

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I thought the best answer was A, but they provided B as the right one. Honestly, I am pretty confused. Can anyone help on that?

Thanks!

#2

its b because commodities are usually associated with perfect competition…

#3

or just exclude the other two leaving B as the only option.

A can’t be right since some firms in oligopoly have a dominant firm position, and C can’t be right as oligopolies have pretty high barriers to entry (one of them being cost of capital to enter)

#4

Thanks meeee20, but look what I found in the CFA curriculum:

“Other examples of oligopoly markets are made up of homogeneous products with little or no attempt at product differentiation, such as petroleum and cement”

(Institute 170)

Institute, CFA. Level I 2013 Volume 2 Economics. John Wiley & Sons P&T, 7/3/2012. VitalBook file.

Don’t you think that it makes both answer acceptables?

#5

I see your point robjames. Thanks for pointing it!

#6

No problem. Keep in mind that the question asks for the least likely thing for an oligopoly to have. You won’t always have clear cut answers and will have to use your best judgment in certain situations.

#7

I crossed out A and C, left with B…and B sounds like it’s describing a perfect competition economy.