CA Foundation · Business Economics · Price Determination in Different Markets
Which of the following is a feature of an oligopoly market that is NOT found in perfect competition?
The correct answer is interdependence of firms in decision making. With only a few sellers, each firm must consider rivals' reactions when setting price or output. Free entry, price taking and perfect knowledge belong to perfect competition, not oligopoly.
- AFree entry and exit of firms
- BInterdependence of firms in decision makingCorrect
- CPrice taking behaviour by firms
- DPerfect knowledge among buyers and sellers
Explanation
In oligopoly there are few sellers, so each firm's price and output decisions affect rivals and provoke reactions; this is mutual interdependence. Free entry, price taking and perfect knowledge are features of perfect competition, so they do not distinguish oligopoly from it.
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