In the Long Run an Oligopoly

question 51

Multiple Choice

In the long run an oligopoly:

• A) will always produce less than a monopoly.
• B) may be able to earn positive economic profits.
• C) will always produce in the range of decreasing returns to scale.
• D) will produce on the portion of the demand curve where demand is price-inelastic.

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Definitions:

Intrinsic Value

The actual, inherent value of an asset, determined through fundamental analysis without reference to its market value.

Call Option

A financial contract granting the buyer the right to buy an asset at a specified price before a set date.

Exercise Price

The cost at which the person holding the option has the right to purchase (in the case of a call option) or sell (in the case of a put option) the underlying asset.

Underlying Stock

This refers to the stock on which derivative contracts, such as options and futures, are based.