Oligopoly is a common form of big business in America. Automobiles, soft drinks, fast food franchises, cigarettes, beer, and cell phone services all fall into the category of oligopoly.

a. What are the characteristics of an oligopoly? List and explain the three most important characteristics.

b. Many oligopolies are successful in earning economic profit year after year. Identify and explain what characteristic of oligopoly is most responsible for the presence of long-run economic profits.

c. Many oligopolies sell differentiated products. List and explain three ways in which the firm may attempt to differentiate its product and explain why the firm would wish to differentiate its product.