Suppose an Oligopolist Individually Maximises Its Profits

question 18

Multiple Choice

Suppose an oligopolist individually maximises 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 maximised profits.
• C) is in a Nash equilibrium.
• D) should produce fewer units.
• E) should exit the industry.

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Definitions:

Anticompetitive Effect

A situation or action that harms competition in a market, often by creating barriers to entry or monopolizing a sector.

Foreclosed

A legal process by which a lender takes possession of property used as collateral for a loan that has not been repaid according to the terms of the mortgage or deed of trust.

Antitrust Laws

Laws designed to protect trade and commerce from abusive practices such as monopolies, price fixing, and other unfair business practices.

Oligopolistic Structure

A market structure characterized by a small number of large firms dominating the market, often leading to limited competition.