Question

Why is price and output said to be “indeterminate” under oligopoly?

Options

• Demand and cost conditions are always constant

• There are many sellers with perfect information

• Few interdependent firms and uncertain demand make a single clear solution impossible

• Government always fixes price and output

Answer 1

Few interdependent firms and uncertain demand make a single clear solution impossible

Explanation:

Because only a few firms interact strategically and each firm’s demand depends on uncertain rival reactions, no single general theory can fix one definite price and output level.