As the Number of Firms in an Oligopoly Increases,the Quantity

question 221

Multiple Choice

As the number of firms in an oligopoly increases,the quantity of output produced (i) decreases.
(ii) increases.
(iii) eventually approaches the socially-optimal level.

• A)(i) and (ii)
• B)(ii) and (iii)
• C)(i) and (iii)
• D)(ii) only

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Definitions:

Total Fixed Costs

The sum of all costs required to produce any output, assuming they remain constant regardless of the level of production.

Fixed Costs

are expenses that do not change in response to the level of goods or services produced by a business, like rent or salaries.

Variable Costs

Expenses that change in proportion to the production or sales figures.

Variable Costs

Costs that vary directly with the level of production or sales volume, such as raw materials and labor expenses.