A firm that is in an oligopoly knows that its _____ affect its _____ and that the _____ of its rivals will affect it.
A)actions;rivals;reactions
B)price changes;total revenue in a positive way;reactions
C)actions rarely;rivals;actions
D)price increases;total revenue in the long run only;large but not small price changes

Question

Quizplus · Accepted Answer

In an oligopoly market, firms are interdependent and their actions can affect the behavior of their rivals. Therefore, a firm in an oligopoly market needs to consider how its actions (such as pricing decisions or marketing strategies) will affect its competitors and how its competitors will react. Hence, Option A is the correct answer. Option B and D are incorrect as they only focus on price changes and their impact on revenue, without considering the reactions of rivals. Option C is also incorrect as it suggests that firms in an oligopoly are not aware of the actions of their rivals, which is not true.

A Firm That Is in an Oligopoly Knows That Its