Question

there are many different models of oligopoly because: group of answer choices beliefs play an important role in oligopolistic competition. beliefs play an important role in oligopolistic competition and oligopoly is the most complicated type of market structure. firms do not maximize profits in oligopolistic competition. oligopoly is the most complicated type of market structure.

Answer 1

Oligopoly is a market structure characterized by a few large, profitable firms that dominate the market and possess significant market power. These firms are interdependent and their behaviors affect each other. Game theory is used to analyze the behavior of oligopolies.

Step-by-step explanation:

Oligopoly is a market structure characterized by a few large, profitable firms that dominate the market and possess significant market power. These firms, typically 70-80% of the market output, prevent smaller firms from entering the market. Oligopolies can either make differentiated products or produce similar products. However, they are defined by their interdependence, where changes in price or output by one firm directly affect other firms in the industry.

Because of the complexity of oligopoly and the mutual interdependence among firms, there is no single, universally accepted theory of how oligopolies behave. Economists use game theory to analyze oligopoly behavior, which is a branch of mathematics that studies decision-making and payoffs based on what other players decide to do. Game theory has applications in various fields, including business, law, and military strategy.