If Firm A in an oligopoly market decides to lower its prices, what is the most likely response from Firm B, and why?

• A. Firm B will lower its prices to remain competitive.
• B. Firm B will maintain its prices to maximize profits.
• C. Firm B will increase its prices to differentiate its product.
• D. Firm B will exit the market due to reduced profitability.

Answer: (A)