It is difficult to explain how firms behave in an oligopoly because
A)they produce differentiated products
B)there are many suppliers and few buyers
C)they do not attempt to maximize profits
D)each takes into account the behavior of other firms when making pricing decisions
E)there are no barriers to entry or exit

Question

Quizplus · Accepted Answer

In an oligopoly, firms behave strategically by taking into account the behavior of other firms when making pricing decisions. They are interdependent, meaning that each firm's decisions and actions can impact the profits of other firms in the market. This makes it difficult to predict how they will behave and makes it challenging to model their behavior. The other options (A, B, C, and E) do not fully capture the complexity of oligopolistic behavior.

It Is Difficult to Explain How Firms Behave in an Oligopoly