Which is a likely characteristic of a differentiated oligopolistic market?
A) There are minimal barriers to entry.
B) The market demand curve is inelastic.
C) There is minimal advertising expenditure.
D) Price and output decisions of firms are interdependent.

Question

Quizplus · Accepted Answer

In a differentiated oligopolistic market, firms produce slightly different products, making them interdependent in terms of price and output decisions. This means that the actions of one firm will affect the profits and market share of the other firms. Therefore, interdependence is a likely characteristic of this market structure. A) is incorrect because there are often significant barriers to entry in oligopolistic markets. B) is also incorrect because an inelastic demand curve is not necessarily a characteristic of differentiated oligopoly. C) is also incorrect because advertising expenditure is often high in differentiated markets to help firms distinguish their products from their competitors.

Which Is a Likely Characteristic of a Differentiated Oligopolistic Market