If one firm in an oligopoly cuts prices,then most likely,its competitors:
A) will make profits.
B) will also respond with similar price cuts.
C) will correspondingly raise prices.
D) will capture additional market share.
E) will not be impacted by the price cuts.

Question

Quizplus · Accepted Answer

In an oligopoly, firms are interdependent and their actions have a direct impact on their competitors. If one firm cuts prices, its competitors are likely to respond with similar price cuts to retain or increase their market share. This is known as price competition, which is a common characteristic of oligopolies. Therefore, the most likely response of competitors to a price cut would be to also cut their prices.

If One Firm in an Oligopoly Cuts Prices,then Most Likely,its