If mutual interdependence among firms is present,then each profit-maximizing firm in the market:

Question

Quizplus · Accepted Answer

Mutual interdependence among firms implies that the actions of one firm affect the profits and decisions of its rivals. Therefore, each profit-maximizing firm must consider the reactions of its rivals when it determines its pricing policy. This is because if a firm lowers its price, its rivals may follow suit, leading to a price war and lower profits for all firms. As a result, pricing decisions are strategic, and firms must weigh the potential benefits of increasing their market share against the potential costs of triggering a competitive response from rivals. The other choices are not applicable to the concept of mutual interdependence among firms.

If Mutual Interdependence Among Firms Is Present,then Each Profit-Maximizing Firm