1. Explain why each of the following industries is an oligopoly, not a perfectly competitive industry.
The world oil industry, where a few countries near the Persian Gulf control much of the world’s oil reserves
The world oil industry is an oligopoly because a few countries control a necessary resource for production, oil reserves.
The microprocessor industry, where two firms, Intel and its bitter rival AMD, dominate the technology
The microprocessor industry is an oligopoly because two firms possess superior technology and so dominate industry production.
The wide-body passenger jet industry, composed of the American firm Boeing and the European firm Airbus, where production is characterized by extremely large fixed cost
The wide-body passenger jet industry is an oligopoly because there are increasing returns to scale in production.