06-07-2011, 06:49 PM
Part A: In which market structure this case falls?
Market structure: oligopoly
Part B: Why the demand curve of oil is relatively inelastic?
Oil Industry lies in the oligopolistic market structure which has few no of sellers in the market and people are bound to fulfill their needs through this limited supply, so price rise does not effect much on their demand. secondly the oligopolists are well aware of moves. Thats why demand curve of oil is relatively inelastic.
Market structure: oligopoly
Part B: Why the demand curve of oil is relatively inelastic?
Oil Industry lies in the oligopolistic market structure which has few no of sellers in the market and people are bound to fulfill their needs through this limited supply, so price rise does not effect much on their demand. secondly the oligopolists are well aware of moves. Thats why demand curve of oil is relatively inelastic.
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