Tara Whitehall is responsible for price setting at her firm. The last time she raised her price, competitors left their prices at the lower level and she lost customers. Now she wants to increase her market share with a lower price, but she is concerned that her competitors will "follow" her to the lower price level. Whitehall is probably operating in an environment of:
A) oligopoly.
B) pure competition.
C) monopoly.
D) monopolistic competition.

Question

Quizplus · Accepted Answer

In an oligopoly, firms are interdependent and must consider the potential reactions of competitors when making pricing decisions. Tara's concern about competitors following her price changes suggests an oligopolistic market structure.

Tara Whitehall Is Responsible for Price Setting at Her Firm