When the price and output decisions of one firm include the possible price and output reactions of the firm's rivals, the market is
A) a monopoly characterized by differentiated products.
B) an oligopoly characterized by mutual interdependence.
C) perfectly competitive characterized by collusion.
D) monopolistically competitive characterized by nonprice competition.

Question

Quizplus · Accepted Answer

When firms in an industry are interdependent, meaning that their price and output decisions are affected by the actions of their rivals, it is characteristic of an oligopoly market structure. In an oligopoly, firms must consider the potential reactions of their competitors when making decisions about price, output, and other factors that will affect their market share and profitability.

When the Price and Output Decisions of One Firm Include