A reaction function is
A) companies colluding in order to make higher than competitive rates of return.
B) the manner in which one oligopolist reacts to a change in price made by another oligopolist in the industry.
C) a game in which firms will not negotiate in any way.
D) when plans made by firms are known as game strategies.

Question

Quizplus · Accepted Answer

A reaction function describes how one oligopolist will react to a change in price made by another oligopolist in the industry. It is a key concept in understanding the behavior and strategies of firms in oligopolistic markets. Choices A, C, and D do not accurately describe a reaction function.

A Reaction Function Is