Interdependence implies that each firm in an industry
A)is independent of one another and are essentially price takers.
B)is aware that its actions influence the others and that the actions of the other firms affect it.
C)is so large and powerful that they do not need to consider how their actions will affect their rivals.
D)must depend on the other firms to maintain consumers' interest in their "mutual" product.

Question

Quizplus · Accepted Answer

Interdependence in the context of firms within an industry means that each firm is aware that its decisions (such as pricing, output, and product development) will affect and be affected by the decisions of other firms in the industry. This is particularly true in oligopolistic markets where a few firms dominate and each must consider the potential reactions of its rivals when making strategic decisions.

Interdependence Implies That Each Firm in an Industry