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

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

calee chambers · Accepted Answer

Final Answer : A, Explanation :  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.

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