The fact that firms in oligopoly are interdependent means that
A) there are barriers to entry.
B) one firm's profits are affected by other firms' actions.
C) they can produce either identical or differentiated goods.
D) there are too many of them for any one firm to influence price.
E) they definitely compete with each other so that the price is driven down to the monopoly level.

Question

Quizplus · Accepted Answer

The interdependence of firms in an oligopoly means that each firm's profits are affected by the actions of other firms in the market. This can lead to strategic behavior and competition, even when there are only a few firms in the market. Barriers to entry may exist, and goods may be either identical or differentiated, but those factors are not directly tied to the interdependent nature of oligopoly. The number of firms in the market may be limited, but that does not necessarily mean that no firm can influence price. Finally, the price in an oligopoly market may or may not be driven down to the monopoly level, depending on the specific circumstances of the market.

The Fact That Firms in Oligopoly Are Interdependent Means That