Mutual interdependence means that each firm in an oligopolistic industry:
A) faces a perfectly inelastic demand for its product.
B) considers the reactions of its rivals when it determines its price policy.
C) makes a product identical to those produced by its rivals.
D) makes a product similar but not identical to those produced by its rivals.

Question

Quizplus · Accepted Answer

Mutual interdependence means that firms in an oligopolistic industry consider the reactions and responses of their rivals when making decisions about pricing and other competitive actions. It reflects the idea that the actions of one firm will have significant effects on the others, and vice versa. Therefore, option B is the best choice as it correctly describes this concept. Options A, C, and D do not capture the essence of mutual interdependence in oligopolistic markets.

Mutual Interdependence Means That Each Firm in an Oligopolistic Industry