Assuming That Oligopolists Do Not Have the Opportunity to Collude

question 83

Multiple Choice

Assuming that oligopolists do not have the opportunity to collude, once they have reached the Nash equilibrium, it

• A)is always in their best interest to supply more to the market.
• B)is always in their best interest to supply less to the market.
• C)is always in their best interest to leave their quantities supplied unchanged.
• D)may be in their best interest to do any of the above, depending on market conditions.

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Definitions:

Marginal Product

The additional output that is produced by adding one more unit of a variable resource, such as labor or capital, to the production process.

Average Product

The output produced per unit of a factor of production, calculated by dividing total product by the quantity of the input.

Textile Firm

A textile firm is a company that specializes in the production and distribution of fabrics and fabric-based products.

Marginal Product

The additional output that is produced by using one more unit of a particular input while keeping other inputs constant.