Chapter 64, Problem 2MCQ

To determine

To state: the term used when the firm's actions affect each other’s profits.

Answer to Problem 2MCQ

The correct option is E i.e interdependent.

Explanation of Solution

Firms are said to be interdependent when the profit or we can say the outcome of each of the firms is dependent on the actions of the other firms in the market.

So, within a group of firms, if the actions of the firms affect each other’s profits, the firms are necessarily interdependent.

Economics Concept Introduction

Introduction:

Interdependent firms: firms are said to be interdependent when the profit or we can say the outcome of each of the firms is dependent on the actions of the other firms in the market.