Mutual interdependence means that each firm in an oligopoly
A) faces a perfectly inelastic demand for its product.
B) considers the reactions of its rivals when it determines its pricing policy.
C) depends on the other firms for its inputs.
D) depends on the other firms for its markets.

Question

Quizplus · Accepted Answer

Mutual interdependence means that the actions of one firm will have a significant impact on the other firms in the market. Therefore, each firm must take into account the reactions of its rivals when it determines its pricing policy or makes any other strategic decision. This is why option B is the best choice. Options A, C, and D do not accurately describe the concept of mutual interdependence in an oligopoly market.

Mutual Interdependence Means That Each Firm in an Oligopoly