We theoretically investigate the influence of dynamic Coulomb interaction on optical bistability and Rabi oscillations in a driven two-level semiconductor quantum dot system under laser irradiation. Using density matrix equations derived from the Coulomb-interaction model proposed by Lu et al. [Phys. Rev. A 103, 043504 (2021)2469-992610.1103/PhysRevA.103.043504], we obtain analytical solutions for population inversion under the rotating wave approximation. Our analysis shows that the Coulomb interaction induces optical bistability, governed by a cubic equation. The thresholds and the shapes of the hysteresis loops are tunable and can be controlled by various parameters, including electron density, confinement potential, detuning, and dephasing. Additionally, our numerical simulations demonstrate the potential for achieving high-efficiency population inversion and predicting bifurcation and anharmonic regimes in Rabi oscillations under monochromatic excitation.