Question

Which of the following statements regarding the trucking industry is correct?

Question 1 options:

	Over the past several years, losses and exit from the industry have substantially reduced the degree of competition in the industry.
	The trucking industry most closely resembles an oligopoly.
	Even though there is a high degree of competition, firms in the trucking industry are able to sustain positive economic profits as a result of a substantial degree of product differentiation.
	Between 1999 and 2007, the behavior of firms in the trucking industry closely matched the outcome predicted by the model of perfect competition.

Answer 1

The trucking industry most closely resembles an oligopoly and even though there is competition the firms in the trucking industry are able to sustain economic profit due to product differentiation are correct statements.

Oligopoly is a market structure which is controlled by few large sellers.Trucking has high level of competition and like the air transport industry, the trucking industry is also controlled by restrictive policies.So it resembles oligopoly.

Economic profit means super normal profit.There is high level of competition in trucking industry.Better and different types services becomes available to consumers through competition.So a wide array of services become available to consumers.This reduces cost and innovation and quality improvement takes place.So increased competition and product differentiation brings economic profit. .