Oligopoly cannot be explained using a single theoretical model because:
A)oligopolistic markets are not really found in the real world.
B)the assumptions of the oligopoly model are not realistic.
C)product differentiation makes the model too complex.
D)mutual interdependence makes it difficult to analyze strategic behavior.

Question

Quizplus · Accepted Answer

Mutual interdependence is a key feature of oligopolistic markets, in which firms' actions and decisions affect each other's profits and market share. This makes it difficult to analyze strategic behavior using a single theoretical model, as different oligopoly models make different assumptions about firms' behavior, such as price rigidity, non-price competition, collusion, or game theory. Therefore, economists often use a combination of different models and empirical evidence to explain oligopoly markets. The other choices are incorrect as oligopolies do exist in the real world and product differentiation is an important aspect of oligopolistic competition. While the assumptions of the oligopoly model may not be completely realistic, they are still useful for analyzing oligopoly behavior.

Oligopoly Cannot Be Explained Using a Single Theoretical Model Because