Why is it more difficult for an oligopoly to apply the profit-maximization rule than firms in other market structures?
A) The oligopoly has more rival firms than exist in other market structures.
B) MR is higher than price for an oligopoly.
C) The oligopoly's demand curve depends on the decisions of rival firms in the market.
D) Rival firms in the market will always match price decreases, making it easy to predict the firm's demand.

Question

Quizplus · Accepted Answer

Oligopolies face interdependent decision-making because their demand curves are influenced by the actions of a few other firms in the market, making it difficult to apply the profit-maximization rule without considering the potential reactions of these rival firms.

Why Is It More Difficult for an Oligopoly to Apply