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Question
Which of the following statements is true?
Options
Demand Curve is indeterminate under perfect competition
Demand Curve is indeterminate under monopoly
Demand Curve is indeterminate under monopolistic competition
Demand Curve is indeterminate under oligopoly.
MCQ
Solution
Demand Curve is indeterminate under oligopoly.
Explanation:
In an oligopolistic market, no single firm can accurately forecast its future sales. This is because every change in a competitor's price/output decision would trigger a cascade of actions, reactions, and counter-actions on the part of others. As a result, under this type of market, the nature and location of the demand curve for a firm are unknown.
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