When the Quantity Effect Outweighs the Price Effect, Firms in an Oligopoly

question 131

Multiple Choice

When the quantity effect outweighs the price effect, firms in an oligopoly may have an incentive to:

• A)increase output.
• B)decrease output.
• C)maintain the level of output.
• D)exit the industry.

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Definitions:

Franchising

A method of business expansion where a company (franchisor) allows individuals (franchisees) to operate a business using its trademarks and business model.

Franchisor Fee

A payment made by a franchisee to the franchisor, typically including an upfront purchase price and ongoing royalty fees, for the right to use the franchisor's brand, products, and operational support.

Commission

A service charge assessed by a broker or investment advisor in return for providing investment advice or handling purchases and sales of securities.

Sales Value

The total revenue generated from the sale of goods or services.