One of the defining characteristics of an oligopoly is that:
A) the strategic interactions between a firm and its rivals have a major impact on its profits.
B) no single firm has an impact on the market as a whole.
C) there are only a few buyers in the market.
D) there are no barriers to entry to the market.

Question

Quizplus · Accepted Answer

Oligopolies are characterized by the strategic interactions between a few dominant firms, which have a significant impact on the market outcomes and each other's profits. The actions of one firm affect the behavior of others in the industry, making it necessary to consider the reactions of competitors when making decisions. Hence, the strategic interaction between rivals has a major impact on the profits of each firm. The other options (B, C, and D) do not accurately describe the defining feature of an oligopoly.

One of the Defining Characteristics of an Oligopoly Is That