An oligopoly with a dominant price leader will produce a level of output ?
Correct answer: B. between that which would prevail under competition and that which a monopolist would choose in the same industry
- A. equal to what a monopolist would choose in the same industry
- B. between that which would prevail under competition and that which a monopolist would choose in the same industry
- C. that would prevail under competition
- D. between that which would prevail under competition and that which a monopolistic competitor would choose in the same industry.
Explanation
A dominant price leader typically sets a price above the competitive level but below the monopoly level, so industry output lies between competitive output and monopoly output. This reflects the leader's market power being limited by rival firms.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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