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Why is a firm's demand curve indeterminate under oligopoly?
Why is a firm's demand curve indeterminate under oligopoly?
Expert Solution
The oligopoly market is defined by an indeterminate demand curve. It is a result of intense competition and rivalry among the firms in the market, due to a small number of firms in the market. The factor leads to a high degree of interdependence among the firms regarding output and pricing decisions. The firms are faced by an indeterminate demand curve as there is constant shifting and changes in the market of such firms as a response to the actions of the rival firms. It is not true for other markets. Other markets don't consist of interdependent firms as no firm can have a major influence on the other.
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