Mutual interdependence means that:

Question

Quizplus · Accepted Answer

Mutual interdependence is a situation where the economic decisions of one firm are influenced by the responses of its rivals, and vice versa. Therefore, in such a situation, firms must anticipate the possible reactions of their rivals to their own economic behavior. Choices A and B are incorrect since they refer to demand curves, which are not directly related to mutual interdependence. Choice C is also not accurate since firms do not necessarily choose price and output simultaneously in a situation of mutual interdependence.

Mutual Interdependence Means That