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 the above.

Question

Quizplus · Accepted Answer

The theory of oligopoly is characterized by interdependence between firms, meaning that the actions of each firm are influenced by how they believe their rivals will respond. This creates a situation where game theory is often used to analyze decision-making strategies in oligopolistic markets. Choice A is incorrect as there are many real-world examples of oligopolies, such as the auto industry or the soft drink industry. Choice C is also incorrect as some oligopolies have been around for decades, such as the airline industry. Therefore, the best answer is B.

A Major Characteristic of the Theory of Oligopoly Is That