In studying oligopolistic markets, economists assume that
A)there is no conflict or tension between cooperation and self-interest.
B)it is easy for a group of firms to cooperate and thereby establish and maintain a monopoly outcome.
C)each oligopolist cares only about its own profit.
D)strategic decisions do not play a role in such markets.

Question

Quizplus · Accepted Answer

In oligopolistic markets, firms typically care primarily about their own profits rather than cooperating with other firms. This assumption is central to understanding the behavior of firms in these markets. Choices A, B, and D are incorrect because conflict and tension between cooperation and self-interest often arise in oligopolies, it is difficult for firms to cooperate effectively and consistently enough to establish a monopoly outcome, and strategic decisions play a critical role in determining outcomes in oligopolistic markets.

In Studying Oligopolistic Markets, Economists Assume That