Question

why is competition limited in an oligopoly?
○ high entry costs prevent new producers from entering the market.
○ producers completely refuse to engage in price wars.
○ no major distinctions exist between producers.
○ producers actively segment the market to avoid competition.

Explanation:

In an oligopoly, high entry costs (like large capital requirements, economies of scale) make it hard for new firms to enter. This limits competition as few firms dominate. Other options: Producers may engage in price wars (so B is wrong), products often have distinctions (C wrong), and market segmentation isn't the main reason for limited competition (D wrong).

Answer:

A. High entry costs prevent new producers from entering the market.