When managers in oligopolistic firms make decisions that affect output or price, they must
A) also be sure they erect barriers to entry to prevent new entrants from affecting their plans.
B) anticipate the reactions of their rivals and plan accordingly.
C) register with the Antitrust Division of the Department of Justice.
D) inform the regulators of their industry about their plans.

Question

Quizplus · Accepted Answer

In oligopolistic markets, firms are interdependent and decisions made by one firm can have a significant impact on the other firms in the market. Therefore, in order to make effective decisions about output or price, managers must anticipate the reactions of their rivals and plan accordingly. This is known as strategic interdependence, and it is a key characteristic of oligopoly. Choices A, C, and D are not necessarily required for managers in oligopolistic firms to make decisions about output or price.

When Managers in Oligopolistic Firms Make Decisions That Affect Output