The conclusion that oligopoly is inefficient relative to the competitive ideal must be qualified because:
A. industry price leaders often select a price equal to marginal cost.
B. over time oligopolistic industries may promote more rapid product development and greater
improvement of production techniques than if they were purely competitive.
C. increased output due to persuasive advertising may perfectly offset the restriction of output
caused by monopoly power.
D. many oligopolists sell their products in monopolistically competitive or even purely
competitive industries.
Answer: B
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Answer the following statement(s) true (T) or false (F)
1. The Pareto criterion is a criterion under which any proposal that can be unanimously defeated should be rejected. 2. To be effective, a price ceiling needs only to be enforced. 3. If a tax and a price control have the same effect on the price paid by consumers, then the two policies will create the same deadweight loss. 4. Consumers will benefit from a tariff, because it helps domestic firms and generates revenue for the government. 5. The value of a good is ultimately determined by the amount of labor needed to produce the good.
An uncrowded toll road is ________ because it is ________
A) a public good; both nonrival and nonexcludable B) not a public good; nonrival but excludable C) not a public good; nonexcludable but rival D) not a public good; both rival and excludable
Consider a market that is in equilibrium. If it experiences both a decrease in demand and an increase in supply, what can be said of the new equilibrium? The equilibrium:
A. price and quantity will both rise. B. quantity will definitely fall, while the equilibrium price cannot be predicted. C. price will definitely fall, while the equilibrium quantity cannot be predicted. D. price and quantity will both fall.
Which of the following mergers would result from the purchase of a computer chip company by IBM?
a. A horizontal merger. b. A vertical merger. c. A conglomerate merger. d. An interlocking merger.