Why Is It Difficult for Economists to Predict the Price

question 247

Multiple Choice

Why is it difficult for economists to predict the price and output policy that will emerge in oligopolistic markets?

• A) Economists cannot determine if barriers to entry exist in a market.
• B) Economists cannot predict the reactions that firms will have to the actions and decisions of other firms.
• C) The government prevents economists from acquiring the information that would lead to good predictions.
• D) Firms have a set price and output policy, but the policy is concealed to discourage competition.

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Definitions:

Relay

A system or process in which information, data, or objects are passed along through a series of stations or individuals until the final destination is reached.

Cluster Chain

A series of events, ideas, or objects grouped together due to their connection or relation to one another.

Grapevine

Informal communication channels within organizations where information, rumors, and unofficial news spread among employees.

Close Contacts

Individuals who are closely connected to one another, often through frequent interaction or emotional bonds.