Question

#31 Which of the following is false?

a. In noncollusion, each firm faces an individual demand curve.

b. Demand depends on the degree of pricing interdependence.

c. Duopoliy is an oligopoly with two or more producers in the market.

Answer 1

a. In a noncollusive oligopoly, each firm faces an individual demand curve which is called a kinked demand curve.

Hence, it is True

b. Demand depends on the degree of pricing interdependence especially in case of individual demand curve but it depends on the market characteristics whether rival firm's decisions regarding output or price affect other firms.

Hence, it is Ture

c. Duopoly is an oligopoly with only two firms as 'duo' means two and a classic example of the duopoly is a Cournot model or Bertrand model.

Hence, it is False