A Level Economics AQA Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Prepare for the A Level Economics AQA Exam with our interactive quiz. Test your knowledge with multiple choice questions and detailed explanations. Equip yourself with the tools needed for success!

Start Multiple Choice Practice Test
Start Flash Cards

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

What is the definition of oligopoly?

  1. A market with many small firms

  2. A market structure where a few large firms dominate

  3. A market with a single supplier

  4. A perfectly competitive market

The correct answer is: A market structure where a few large firms dominate

Oligopoly is defined as a market structure where a few large firms dominate the market. This type of market is characterized by the interdependence of the firms, as the decisions made by one firm can significantly impact the others. Due to the limited number of firms, they have considerable market power, which allows them to influence prices and output levels. Additionally, the barriers to entry in oligopoly markets are often high, which further sustains the dominance of the few large firms. In an oligopoly, firms may engage in various strategies such as collusion, where they might work together to set prices or output to maximize joint profits, or they may compete against each other using non-price competition strategies, like advertising or product differentiation. This structure contrasts with other market types, where competition and the number of firms differ fundamentally.

More Questions Like This