Question

Identify the market form which has indeterminate demand curve:

Options

• Perfect competition

• Monopoly

• Oligopoly

• Monopolistic competition

Answer 1

Oligopoly

Explanation:

In an oligopolistic market, no signal firm can accurately estimate its future sales. This is because every change in a competitor's price/output decision would trigger a cascade of actions, reactions, and counter-actions on the part of others. As a result, under this type of market, the nature and location of the demand curve for a firm are unknown.