Which of the following is TRUE of an oligopoly?
A) They engage in nonprice competition.
B) They do not react to actions of their competitors.
C) Each firm produces a small portion of the total output.
D) Firms do not care what their competitors do.

Question

Quizplus · Accepted Answer

Oligopolies typically engage in nonprice competition, such as advertising, product differentiation, or innovation, rather than solely relying on price changes.

Choice B is false as oligopolies must react to their competitors' actions in order to maintain their market share.

Choice C is partially true, as each firm typically produces a significant portion of the total output, but not necessarily a small portion.

Choice D is false as firms in oligopolies are highly concerned with their competitors' actions and may engage in strategic decision making based on their competitors' actions.

Which of the Following Is TRUE of an Oligopoly