The figure given below shows the revenue and cost curves of a firm. MC represents the marginal cost curve, AC the average cost curve, MR the marginal revenue curve, and AR the average revenue curve.Figure 9.4

-Which of the following characteristics distinguishes oligopoly from other market structures?
A)Firms operating in an oligopoly are independent of each other.
B)Firms operating in an oligopoly are interdependent.
C)Oligopoly is the simplest of all the other market structures.
D)An oligopolist does not face a downward-sloping demand curve.
E)Entry into an oligopolistic market is easier than entry into a monopolistically competitive market.

Question

The figure given below shows the revenue and cost curves of a firm. MC represents the marginal cost curve, AC the average cost curve, MR the marginal revenue curve, and AR the average revenue curve.Figure 9.4
 
-Which of the following characteristics distinguishes oligopoly from other market structures?
A)Firms operating in an oligopoly are independent of each other. 
B)Firms operating in an oligopoly are interdependent. 
C)Oligopoly is the simplest of all the other market structures. 
D)An oligopolist does not face a downward-sloping demand curve. 
E)Entry into an oligopolistic market is easier than entry into a monopolistically competitive market.

Quizplus · Accepted Answer

One of the key characteristics of oligopoly is interdependence among firms. This means that the actions of one firm can have a significant impact on the profits of other firms in the industry. In the given figure, we can see that the marginal revenue curve (MR) lies below the demand curve (AR), indicating that the firm operates in an imperfectly competitive market structure. However, this information does not provide any insight into the interdependence of firms, which is the distinguishing feature of oligopoly. Therefore, the answer is B.

The Figure Given Below Shows the Revenue and Cost Curves