To move the allocation of resources closer to the social optimum, policymakers should typically try to induce firms in an oligopoly to
A)collude with each other.
B)form various degrees of cartels.
C)compete rather than cooperate with each other.
D)cooperate rather than compete with each other.

Question

Quizplus · Accepted Answer

In an oligopoly, firms tend to restrict output and raise prices to maximize profits, which leads to inefficiencies. Encouraging competition among firms can lead to lower prices and increased output, moving the market closer to the social optimum.

To Move the Allocation of Resources Closer to the Social