Question at position 1 If the three largest widget producers control 85 percent of the total widget market, then these producers areoperating in 4MC42a cartelperfect competitiona monopoly monopolistic competitionan oligopoly单项选择题
A
a cartel
B
perfect competition
C
a monopoly
D
monopolistic competition
E
an oligopoly

Question

Question at position 1 If the three largest widget producers control 85 percent of the total widget market, then these producers areoperating in 4MC42a cartelperfect competitiona monopoly monopolistic competitionan oligopoly单项选择题

A

a cartel

B

perfect competition

C

a monopoly

D

monopolistic competition

E

an oligopoly

BlackTom AI · Accepted Answer

An oligopoly is characterized by a small number of firms that together hold a large share of the market and whose decisions are mutually interdependent.

1. Relevant concepts
- Oligopoly: a market dominated by a few firms that control a large portion of total output; firms have market power and strategic interaction.
- Monopoly: single firm controls the entire market.
- Perfect competition: many firms, each with negligible market share and no market power.
- Monopolistic competition: many firms with differentiated products and relatively small market shares.
- Cartel: an agreement among firms (often in an oligopoly) to coordinate prices/output—this is a behavior, not the basic market structure.

2. Step-by-step reasoning
- The problem states the three largest producers control 85% of the market. That means very few firms hold the vast majority of market share.
- A market where a few firms dominate meets the basic definition of an oligopoly: concentrated market structure with significant market power among a small number of firms.

3. Calculations / concentration illustration
- If the top three firms split the 85% evenly, each would have about 85% / 3 ≈ 28.33% market share.
- The Herfindahl-Hirschman Index (HHI) lower-bound using only those three firm shares: HHI ≥ 3 × (28.33)^2 ≈ 3 × 802.9 ≈ 2408.7. An HHI around or above 2,500 is typically considered highly concentrated, so this distribution indicates high concentration consistent with an oligopoly.

4. Why the correct answer is correct
- The defining feature given (three firms holding 85% of the market) directly matches the oligopoly concept: a few large firms dominate market output and pricing power.

5. Why other options are incorrect
- Cartel: possible in an oligopoly but denotes collusion; the question describes market structure, not a collusive agreement.
- Perfect competition: ruled out because market share is not dispersed across many small firms.
- Monopoly: ruled out because more than one firm exists and controls the market.
- Monopolistic competition: ruled out because that involves many firms with small shares, not three firms holding 85%.

6. Conclusion
The correct classification is an oligopoly, which matches the provided answer: an oligopoly.

Question at position 1 If the three largest widget producers control 85 percent of the total widget market, then these producers areoperating in 4MC42a cartelperfect competitiona monopoly monopolistic competitionan oligopoly单项选择题

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