Question

What do Sony, Microsoft, and Nintendo have in common?

A	The profitability of each firm depends on its interactions with other firms.

B	Each achieved a dominant position in its industry because it owned a key input in the production of its product.

C	The industry in which each firm competes is an oligopoly because of government-imposed barriers to entry.

E	Each company was founded in the same state.

Answer 1

All three companies - Sony, Microsoft, and Nintendo compete with each other in gaming console market.

This market has few firms and thus is oligopolistic in nature.

When a market is oligopoly, firms are interdependent. In other words, one firm's pricing and output decisions are based on the actions of its competitor. This is crucial for maintaining profitability.

Thus, it can be stated that the profitability of each firm depends on its interactions with other firms.

Hence, the correct answer is the option (A).