Interdependence occurs when firms consider the actions of other firms when making price and output decisions

Marketing Jan 12, 2021

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

Expert Solution

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.

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