Idea sol GDB ECO 401 June 2011

[Vuhelper]

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.

[Akash]

What Does Oligopoly Mean?
A situation in which a particular market is controlled by a small group of firms. ( in this situation some countries control oil market and its difficult to enter other one) .