Why oligopoly market demand curve undetermined ?
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5
Heya...
Oligopoly market ---
It is the form of market in which there are few no of big firms ,
Yes , the demand curve of these markets is indeterminate because :-
√ High degree of interdependency
Explaiination _______
_____________________
• A firm is dependent on each other for the price setting as if a firm want to increase its price may be the reveal firm will not so it will have to bear loose...
Thus a firm can't adjust its products prices due to market insecurity and remain dependent...
Thank you
Oligopoly market ---
It is the form of market in which there are few no of big firms ,
Yes , the demand curve of these markets is indeterminate because :-
√ High degree of interdependency
Explaiination _______
_____________________
• A firm is dependent on each other for the price setting as if a firm want to increase its price may be the reveal firm will not so it will have to bear loose...
Thus a firm can't adjust its products prices due to market insecurity and remain dependent...
Thank you
Answered by
16
Unlike other market structures, under Oligopoly, it is not possible to determine the demand curve of a firm. This is because on one hand, there is a huge interdependence among rivals. ... The rivals can react in different ways when a firm changes its price and that makes the demand curve indeterminate.
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