As the Number of Firms in an Oligopoly Increases, the

question 248

Multiple Choice

As the number of firms in an oligopoly increases, the

• A)price approaches marginal cost, and the quantity approaches the socially efficient level.
• B)price and quantity approach the monopoly levels.
• C)price effect exceeds the output effect.
• D)individual firms' profits increase.

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Definitions:

Marginal Products

The extra output that is produced by using one more unit of a particular input, holding all other inputs constant.

Separating Equilibrium

Separating equilibrium occurs in a game or market when different types of participants choose distinctly different strategies or products, revealing their type.

Pooling Equilibrium

A situation in a market where all agents, regardless of their type or quality, provide the same signal, making it impossible to distinguish between them based on that signal alone.

Microeconomics

The branch of economics that studies individual agents and markets, decision-making processes, and the outcomes of interactions.