Practice prompt · Q:economics-and-market-foundations/analyze-oligopoly-interdependence-001

Analyze few-firm interdependence without inferring agreement

Distinguishes strategic response, parallel conduct, agreement, power, and law.

Updated Aug 7, 2026 Review due Nov 7, 2026

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Three significant firms change posted terms after the same public input-cost announcement. Which conclusion is controlled?

Choose the best answer. a Few significant firms can make rival response strategically relevant, but agreement requires evidence beyond concentration and parallel terms; common shocks and independent anticipation remain alternatives. b Three firms guarantee collusion because independent firms never react to common information in parallel. c Few firms guarantee weak rivalry and high profit in every period.

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Answer: a

Choice a. Oligopoly makes strategic interdependence plausible; it does not prove agreement, power, harm, or illegality.