As the Number of Firms in an Oligopoly Increases, the Magnitude

question 150

Multiple Choice

As the number of firms in an oligopoly increases, the magnitude of the

• A)output effect increases.
• B)output effect decreases.
• C)price effect increases.
• D)price effect decreases.

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Definitions:

Efficiency Wage

A wage set above the market equilibrium to increase productivity by encouraging higher effort or reducing turnover among employees.

Positive Amount of Unemployment

A situation where there is a nonzero level of unemployment in the economy, often considered normal due to frictions and transitions in the job market.

Market-clearing Wage

The wage rate at which the quantity of labor supplied equals the quantity of labor demanded.

Market-clearing Wage

The wage rate at which the quantity of labor supplied is equal to the quantity of labor demanded.