When one firm in the breakfast cereal market started an advertising campaign that stressed the nutritional value of its cereals, all other cereal manufacturers started similar advertising campaign This suggests that the breakfast cereal market is ?
Correct answer: B. oligopolistic
- A. monopolistically competitive
- B. oligopolistic
- C. perfectly competitive
- D. indeterminate from this information
Explanation
The firms' immediate imitation of a rival's advertising shows strategic interdependence, a defining feature of oligopoly. Each firm's marketing decision affects and provokes responses from a small number of significant competitors.
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