Asked by Jonathan Philley on Jul 15, 2024
Verified
Why are the actions of firms interdependent in an oligopoly market but not in a monopolistically competitive market?
Oligopoly
A market structure characterized by a few large firms that dominate the market, often leading to limited competition and higher prices for consumers.
Monopolistically Competitive
A market structure where many firms sell products that are similar but not identical, allowing for a degree of market power and product differentiation.
- Explain the mutual dependency in oligopolistic markets and differentiate it from monopolistic competition.
Verified Answer
CB
Camille BlackJul 15, 2024
Final Answer :
Because there are only a few firms in an oligopoly market, their actions are interdependent. There are so many firms in a monopolistically competitive market that each firm it too small for its actions to affect other firms.
Learning Objectives
- Explain the mutual dependency in oligopolistic markets and differentiate it from monopolistic competition.
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