What do the concepts of interdependence and game theory illustrate about how firms that compete in oligopoly markets price their products?
A) They set a price in the market and do not change it.
B) They consider the actions of their rivals before changing the price of their products.
C) They ignore the actions of their rivals when considering price changes.
D) They engage in frequent price changes.

Question

Quizplus · Accepted Answer

The concepts of interdependence and game theory illustrate that firms in oligopoly markets consider the actions of their rivals before changing the price of their products. This is because any change in price by one firm will affect the market share and profits of other firms in the market. Therefore, firms engage in strategic decision-making by anticipating the reactions of their competitors when considering price changes.

What Do the Concepts of Interdependence and Game Theory Illustrate