Which statement is true about oligopolies?

• A. Firms in an oligopoly cannot influence market prices.
• B. Oligopolistic markets typically have a single seller dominating the market.
• C. Oligopolies always have perfect information and no barriers to entry.
• D. Firms in an oligopoly are interdependent and often consider rivals' actions when making decisions.

Answer: (D)

Verified step by step guidance

1. Understand the definition of an oligopoly: it is a market structure characterized by a few firms that dominate the market, leading to interdependence among them.
2. Recognize that in an oligopoly, firms do have some influence over market prices because there are only a few sellers, but their pricing decisions depend on the expected reactions of their rivals.
3. Note that an oligopoly is not a market with a single seller; that describes a monopoly, so the statement about a single seller dominating is false for oligopolies.
4. Recall that oligopolies do not necessarily have perfect information or no barriers to entry; in fact, barriers to entry are often significant, and information may be imperfect.
5. Conclude that the true statement is that firms in an oligopoly are interdependent and often consider rivals' actions when making decisions, which is a key characteristic distinguishing oligopolies from other market structures.