Game theory is useful to analyze oligopoly markets because
A)each firm is a price taker.
B)the market is comprised of a single firm.
C)the firms in the market engage in strategic behavior.
D)each firm produces a differentiated product.

Question

Game theory is useful to analyze oligopoly markets because
A)​each firm is a price taker.
B)​the market is comprised of a single firm.
C)​the firms in the market engage in strategic behavior.
D)​each firm produces a differentiated product.

Quizplus · Accepted Answer

Oligopoly markets are characterized by few firms that engage in strategic behavior, taking into account the actions and reactions of their competitors in making decisions about production, pricing, and advertising. Game theory provides methods to analyze these interactions and predict the outcomes of different strategic choices made by firms in an oligopolistic environment.

Game Theory Is Useful to Analyze Oligopoly Markets Because