Which of the following is NOT a characteristic of oligopoly?

• A. There are few sellers in the market
• B. Firms may produce either homogeneous or differentiated products
• C. Firms have complete freedom to set prices without considering rivals
• D. Firms are interdependent in their decision-making

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the definition of an oligopoly. An oligopoly is a market structure characterized by a small number of firms whose decisions affect each other.
2. Step 2: Identify the typical characteristics of an oligopoly: (a) few sellers, (b) firms may produce homogeneous or differentiated products, (c) firms are interdependent in their decision-making.
3. Step 3: Analyze the statement 'Firms have complete freedom to set prices without considering rivals.' In an oligopoly, firms are interdependent, meaning they must consider rivals' reactions when setting prices.
4. Step 4: Recognize that the statement about complete freedom to set prices contradicts the interdependence characteristic of oligopoly.
5. Step 5: Conclude that the statement 'Firms have complete freedom to set prices without considering rivals' is NOT a characteristic of oligopoly.