A major characteristic of the theory of oligopoly is that:
A) there are no real-world examples.
B) the reactions of each firm depends on how the firm believes rivals will react.
C) in reality few oligopolies survive more than 10 years.
D) none of these.

Question

Quizplus · Accepted Answer

The theory of oligopoly is based on the assumption that there are a small number of large firms in the market, and the actions of each firm are interdependent. This means that each firm's decision depends on how it expects its rivals to react. Therefore, choice B is correct. Choice A is incorrect, as there are several real-world examples of oligopoly, such as the automobile industry or the telecommunications industry. Choice C is also incorrect, as some oligopolies, such as Coca-Cola or Pepsi, have survived for many decades.

A Major Characteristic of the Theory of Oligopoly Is That