12. The primary difficulty involved in using the profit maximizing model to describe oligopoly behavior is that:

oligopolists don't have enough information to figure out their marginal costs, so the theory is wrong. Whether or not a firm has adequate information for computing its own marginal cost is independant of the competitive envorioment in which it finds itself, so this isn't a reason.

oligopolists don't know what their dominant strategy is because they don't believe in the prisoners dilemma. This is a nonsense answer.

there are too many Firms for us to figure out how profit maximzation works in such industries. Actually the problem with oligopoly is that there are so few firms, not that there are too many. Because there are so few, the behavior of even a single competitor can affect a firm's demand and marginal reveune curves.

an oligopolist's demand curve is dependent on the behavior of its competitors. The simple profit maximization model requires that a firm know the location of its demand and marginal revenue curves. In oligopoly the actions of a single competitor can alter these so that model simply isn't rich enough.

explicit collusion is illegal. Explicit collusion is illegal regardless of the industrial structure, but the reason the simple profit maximization model works in other industrial structures is that there are either too many firms (perfect competition or monopolistic competition) for collusion to be practical, or no other firms (monopoly). Only in oligopoly are there few enough firm for collusion to be a practical consideration and so for our profit maximzing model to break down.