Which of the following statements about oligopoly is false?

• A. Barriers to entry are typically high in oligopoly markets.
• B. Oligopoly markets are characterized by a small number of large firms.
• C. Firms in an oligopoly market often engage in strategic behavior, considering the actions of their rivals.
• D. Firms in an oligopoly always act independently and do not consider competitors when making decisions.

Answer: (D)

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 large firms that dominate the market.
2. Step 2: Recognize that barriers to entry are typically high in oligopolies, which prevents many new firms from entering the market easily.
3. Step 3: Note that firms in an oligopoly are interdependent, meaning they consider the potential reactions of their competitors when making decisions. This leads to strategic behavior.
4. Step 4: Analyze the given statements and identify which one contradicts the key characteristics of oligopoly. The false statement is the one claiming that firms always act independently and do not consider competitors.
5. Step 5: Conclude that because firms in an oligopoly are interdependent and engage in strategic decision-making, the statement about always acting independently is false.