In an oligopoly, what happens when one company changes its price?
A. Nothing changes
B. The government steps in
C. Other companies often respond with their own price change
D. All companies exit the market
Answer (2)
The correct answer is C. Other companies often respond with their own price changeIn an oligopoly, a few firms dominate the market. Because they are interdependent, if one company changes its price, the others usually react—often by changing their prices too—to remain competitive and protect their market share. This behavior leads to strategic pricing decisions among the few firms.
The correct answer is letter C. Other companies often respond with their own price changeIn an oligopoly, firms are interdependent. If one telecom company in the Philippines (like Smart) lowers its mobile data price, Globe and DITO may also adjust prices to stay competitive.
