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Oligopoly, Monopoly, Competitive Markets and Firm Costs

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Please explain these questions:

Is it false that the defining characteristic of oligopoly is that each firm is mutually interdependent?
Is it true that a price discriminating monopolist charges the same price to everyone? (Be sure to point out that a price discriminating monopolist must be the only seller in the market.).
Is it false that most consumers would prefer markets that are purely competitive?
Is it true that a firm should shut down in the short run if price is less than average fixed costs?

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Solution Summary

This solution provides complete, clear explanations for each statement listed. I explain why each economic statement is true or false. All questions are thoroughly answered.

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Is it false that the defining characteristic of oligopoly is that each firm is mutually interdependent?

NO, this is true. An oligopoly exists because of mutual interdependence in the given industry. There are a handful of sellers that can dominate the market. Pricing changes also follow that of the same structure -- when an oligopoly seller drops a price, the other sellers will follow suit and meet the price drop but when the oligopoly seller increases its price, the other sellers in the oligopoly will hold their prices constant and will not raise their prices.

Is it true that a price discriminating monopolist charges the same price to everyone? (Be sure to point out that a price discriminating monopolist must be the only seller in the ...

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