An Oligopoly Would Tend to Restrict Output and Drive Up

question 62

Multiple Choice

An oligopoly would tend to restrict output and drive up price if

• A)barriers to entering the industry are negligible.
• B)firms engage in informative advertising.
• C)firms produce a standardized product.
• D)firms collude and behave like a monopoly.

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Definitions:

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive, due to higher market prices.

Equilibrium Point

The point at which market supply and demand balance each other, and as a result, prices become stable.

S And D Curves

Stand for Supply and Demand curves, graphical representations in economics that illustrate the relationship between the quantity of goods available for sale and the quantity of goods that consumers are willing and able to buy at various prices.

Total Revenues

The entire amount of money received by a company from its business activities before any expenses are subtracted.