The Conclusion That Oligopoly Is Inefficient Relative to the Competitive

question 342

Multiple Choice

The conclusion that oligopoly is inefficient relative to the competitive ideal must be qualified because

• A)industry price leaders often select a price equal to marginal cost.
• B)over time oligopolistic industries may promote more rapid product development and greater improvement of production techniques than if they were purely competitive.
• C)increased output due to persuasive advertising may perfectly offset the restriction of output caused by monopoly power.
• D)many oligopolists sell their products in monopolistically competitive or even purely competitive industries.

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Definitions:

Acetaminophen

A medication used to reduce pain and fever; known in some countries as paracetamol.

Prostaglandins

A group of physiologically active lipid compounds that have diverse hormone-like effects in animals, playing roles in inflammation, pain, and other bodily functions.

Ibuprofen

A nonsteroidal anti-inflammatory drug (NSAID) commonly used to reduce fever, pain, and inflammation.

Opiate Receptors

Proteins located in the brain, spinal cord, and gastrointestinal tract that bind opiates or opioid substances, affecting pain and pleasure responses.