An oligopoly would tend to restrict output and drive up price if
A)barriers to entering the industry are negligible.
B)firms engage in informative advertising.
C)firms produce a standardized product.
D)firms collude and behave like a monopoly.

Question

Quizplus · Accepted Answer

An oligopoly is a market structure in which a small number of firms dominate the market. If these firms collude and behave like a monopoly, they can restrict output and drive up price. This is because they have significant market power and can affect the market price by controlling the quantity supplied. If barriers to entering the industry are negligible or firms produce a standardized product, it may be easier for new firms to enter the market and compete with the existing firms, reducing their market power and ability to set high prices. If firms engage in informative advertising, it may increase competition but may not necessarily cause firms to restrict output and drive up price.

An Oligopoly Would Tend to Restrict Output and Drive Up