Which of the following statements is always true with respect to oligopolists?
A) They react slowly to actions taken by other firms
B) They lower prices together
C) They raise prices together
D) They know with certainty what they other firms will do
E) They take into consideration how other firms might react.

Question

Quizplus · Accepted Answer

Oligopolists take into consideration how other firms might react. This is because their actions have a significant impact on the market and on their competitors' actions. As a result, oligopolists must anticipate and respond to the actions of their competitors in order to maintain their market position. While oligopolists may collude to raise prices together (C), this behavior is often illegal and can lead to antitrust violations. Similarly, while oligopolists may occasionally agree to lower prices together (B), this type of behavior is rare and typically requires a significant catalyst. Oligopolists do not react slowly to actions taken by other firms (A), nor do they know with certainty what other firms will do (D), as the behavior of other firms is dependent on a number of external factors that cannot be predicted with certainty.

Which of the Following Statements Is Always True with Respect