Question

The mutual interdependence that characterizes oligopoly arises because_______________.a. the products of various firms are differentiated.b. the demand curves of firms are kinked at the prevailing price.c. each firm in an oligopoly depends on its own pricing strategy and that of its rivals.d. the products of various firms are homogeneous.

Answer 1

Answer:

The correct answer is option c.

Explanation:

An oligopoly is a market structure where there are a few sellers. These sellers may be selling homogenous or differentiated products.  

There is high competition in the market. The sellers are interdependent on each other.  

This interdependence happens because of a few sellers. The decisions of a seller affect its rivals. So before making a decision regarding price and output, a firm must consider the reaction of its rivals.  

So all the firms are mutually interdependent.