Suppose an Oligopolist Individually Maximizes Its Profits

question 55

Multiple Choice

Suppose an oligopolist individually maximizes its profits. When calculating profits, if the output effect exceeds the price effect on the marginal unit of production, then the oligopolist

• A) should produce more units.
• B) has maximized profits.
• C) is in a Nash equilibrium.
• D) should produce fewer units.
• E) should exit the industry.

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Definitions:

Income Statement Account

An account found on the income statement that records business transactions affecting the company's revenue, expenses, gains, and losses.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of the business, whichever is longer.

Balance Sheet

A financial statement that displays a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a basis for computing rates of return and evaluating its capital structure.

Assets

Economic resources owned or controlled by a business or an individual, expected to provide future benefits.