Which of the following differentiates firm behavior in oligopoly from firm behavior in other market structures?
A) They are price makers.
B) They collude to lower prices together.
C) They collude to raise prices together.
D) They are price takers.
E) They take into consideration how other firms might react to their actions.

Question

Quizplus · Accepted Answer

Oligopolies are characterized by a small number of firms where each firm must consider the potential reactions of its rivals to its own actions, such as changes in price, output, or product characteristics. This interdependence is what differentiates oligopolies from other market structures, where firms either do not have significant market power (as in perfect competition) or do not directly consider competitors' reactions in the same manner (as in monopolistic competition or monopoly).

Which of the Following Differentiates Firm Behavior in Oligopoly from Firm