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Question
Explain the implications of the following in an oligopoly market:
Inter- dependence between firms
Solution
Interdependence between firms:- In an oligopoly market, the price and level of output of one firm impacts the price and level of output of rival firms. Keeping this impact in mind, a firm decides the price and output in accordance with prevailing market conditions. Hence, a high degree of interdependence exists among competing firms, especially with respect to price and quantity of output.
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