MYTUTOR SUBJECT ANSWERS

138 views

What is meant by an oligopoly being both interdependent and uncertain in their price strategies?

Oligopolies are interdependant as the success of their price strategy relies on the reaction of other oligopoly firms in the market. If an oligopoly decided to increase the price of it's output, they would only experience increased revenue if the other firms also increased their price, making the firm dependant on the others.

The aspect of uncertainty follows a similar theory; oligopolies are never certain of how rivals will react - even in the case of collusion. It would be in all firms' best interest to increase their prices as this will also increase everyones revenue, however this is unlikely due to uncertainty. If all firms decided to increase their price but one firm changed their mind, that one firm would capture the market share of all the others as well as taking their revenue potential. This therefore means prices are likely to be stable in oligpolostic markets.

Reubin B. GCSE Maths tutor, A Level Maths tutor, GCSE Economics tutor...

3 months ago

Answered by Reubin, an A Level Economics tutor with MyTutor


Still stuck? Get one-to-one help from a personally interviewed subject specialist

45 SUBJECT SPECIALISTS

£20 /hr

Zaynah A.

Degree: Economics (Bachelors) - Birmingham University

Subjects offered: Economics, Psychology+ 1 more

Economics
Psychology
History

“Hi, I’m Zaynah and I’m a first year Economist at the University of Birmingham. Economics can seem daunting and complicated at first but I’ve found that once a student understands the core principles of the subject, everything else fall...”

£30 /hr

William A.

Degree: Law (Bachelors) - Cambridge alumni University

Subjects offered: Economics, Maths+ 3 more

Economics
Maths
Law
Chemistry
.LNAT.

“I recently graduated from the University of Cambridge in Law and completed my A Levels in 2012 with 4 A*s in Maths, Economics, Physics and Chemistry.I am a friendly and approachable person and have previously tutored A Level Econom...”

£20 /hr

Linden S.

Degree: Economics and Finance (Bachelors) - Exeter University

Subjects offered: Economics, Maths

Economics
Maths

“I am currently in my third year studying economics and finance at the  University of Exeter. As well as having a strong passion for economics, I have a great love for mathematics too. I have experience in teaching through coaching ten...”

About the author

£20 /hr

Reubin B.

Degree: Business Economics (Bachelors) - Exeter University

Subjects offered: Economics, Maths+ 1 more

Economics
Maths
Graphic Design

“ABOUT ME I am currently a student at the University of Exeter studying Business Economics. I have a keen interest in all aspects of economics with the passion to guide you through your course, and the hope to inspire the same enthusia...”

MyTutor guarantee

You may also like...

Posts by Reubin

Explain how the diagram for a perfectly competitive firm demonstrates static efficiency.

List and explain some ways in which a monopolistic firm can use it's lower costs as a barrier to entry.

What is meant by an oligopoly being both interdependent and uncertain in their price strategies?

Why might a perfectly competitive firm make abnormal profit in the short run but only normal profit in the long run?

Other A Level Economics questions

What are the Macroeconomic Effects of Currency Fluctuations?

What are the likely impacts of a sustained budget deficit for an economy?

What is elasticity of demand and how do you work it out?

How can the Government improve economic growth/real GDP of a country?

View A Level Economics tutors

Cookies:

We use cookies to improve our service. By continuing to use this website, we'll assume that you're OK with this. Dismiss

mtw:mercury1:status:ok