Which one of the following characteristics applies to oligopolistic markets?
A)There is free entry of rival firms.
B)Firms are so large relative to the market that they do not have to consider the behaviour of rival firms.
C)Firms are mutually independent because there are many firms in the industry.
D)Firms have to consider the behaviour of their rivals since their rivals are also large relative to the size of the market as a whole.
E)Economic profit of each firm equals zero.

Question

Quizplus · Accepted Answer

In oligopolistic markets, firms are typically large relative to the market, and there are only a few firms in the industry. As a result, each firm must consider the potential reactions of its rivals when making decisions. This is because the actions of one firm will likely have an impact on the others, and each firm will want to anticipate and respond to those impacts to protect its own profitability. Therefore, option D is the correct answer.

Which One of the Following Characteristics Applies to Oligopolistic Markets