The Theory of Oligopoly Provides Another Reason That Free Trade

question 64

Multiple Choice

The theory of oligopoly provides another reason that free trade can benefit all countries because

• A)increased competition leads to larger deadweight losses.
• B)as the number of firms within a given market increases, the price of the good decreases.
• C)as the number of firms within a given market increases, the profit of each firm increases.
• D)All of the above are correct.

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Definitions:

Ambidexterity

The ability to be equally proficient in using both the right and left hands, or the capacity of an organization to innovate while also maintaining efficiency in existing operations.

Innovation

The process of creating new ideas, products, or methods, which improve upon the existing standards and contribute to progress.

Survival

The act of continuing to live or exist, often despite hardship or danger.

Formalization

The extent to which an organization uses rules, procedures, and standardized processes to govern behaviors and decisions within the organization.