Question

An oligopoly differs from a monopoly in that an oligopolist:

A. must consider the behavior of its rivals when it makes decisions.
B. has significant control over its price.
C. produces where price is greater than marginal revenue.
D. maximizes profits where marginal revenue equals marginal cost.

Answer 1

A. must consider the behavior of its rivals when it makes decisions.

Step-by-step explanation:

An oligopoly occurs when a small number of firms operate in a market, and firms cannot control the influence of other firms in the market. Each firm has the ability to influence the market.

A key feature of oligopoly is interdependence. Firms look at other firms behaviours before making decisions. It is a form of tacit collusion.

Decisions on output, price, advertising and other depends on decision of other firms in the market.