DECA Sports and Entertainment Marketing Practice Exam

Which term describes a business situation where a few firms affect but do not completely control an industry?

1. Monopoly

2. Oligopoly

3. Perfect Competition

4. Duopoly

The correct answer is: Oligopoly

The term that describes a business situation where a few firms affect but do not completely control an industry is oligopoly. In an oligopoly, a small number of firms hold a significant share of the market, meaning their actions can influence prices and output levels. However, because there are multiple firms in the market, no single firm can monopolize the industry. This leads to a situation where firms must consider the actions and reactions of their competitors when making business decisions, creating an interdependent relationship among them. In contrast, a monopoly refers to a market structure where a single company completely controls the market for a product or service, leaving no room for competition. Perfect competition involves a large number of firms competing with identical products, resulting in no single firm having any control over market prices. A duopoly, on the other hand, is a specific case of an oligopoly where only two firms dominate the market.