Fill This Form To Receive Instant Help
Homework answers / question archive / Interdependence occurs when firms consider the actions of other firms when making price and output decisions
Interdependence occurs when firms consider the actions of other firms when making price and output decisions.
A. all firms in an industry are affected by the same general economic conditions, like consumer incomes and the unemployment rate.
B. firms cooperate to increase profit.
C. both a and b.
D. all of the above
Ans: both a and b
Explanation
Since the number of firms are few, any decision regarding the price and output by one firm will have a large impact on other firms. Therefore, it is better for the firms to take decisions on mutual understanding which will increase their profit. These firms take decisions cooperatively. All the firms faces same general economic conditions, like consumer incomes and unemployment rate.
Thus, option C is correct answer.