If the Price in an Oligopoly Market Is the Same

question 216

Multiple Choice

If the price in an oligopoly market is the same as that of a monopoly with identical cost and demand conditions then

• A) the average cost curve must be downward sloping.
• B) there may be collusion between firms.
• C) market demand must be unit elastic.
• D) This could never happen.

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Definitions:

Potential Output

The highest level of real GDP that can be sustained over the long term without increasing inflation, reflecting the maximum productive capacity of an economy.

Labor Force

The total number of people who are employed and unemployed but seeking work within an economy.

Price Level

The overall cost of goods and services expressed as an index, which helps to compare different periods' economic conditions.

Long-Run Aggregate Supply

The total amount of goods and services produced in an economy at full employment, unaffected by price levels in the long term.