When a oligopolist individually chooses its level of production to maximize its profits it charges a price that is ?
Correct answer: D. less than the price charged by a monopoly and more than the price charged by a competitive market
- A. more than the price charged by either monopoly or a competitive market
- B. less than the price charged by either monopoly or a competitive market
- C. more than the price charged by a monopoly and less then the price charged by a competitive market
- D. less than the price charged by a monopoly and more than the price charged by a competitive market
Explanation
With independent profit-maximising output choices, an oligopoly produces more than a monopoly but less than perfect competition. Its price therefore lies below the monopoly price and above the competitive price.
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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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