Assume oligopoly firms are profit maximizers, they do not form a cartel, and they take other firms' production levels as given. Then in equilibrium the output effect
A)must dominate the price effect.
B)must be smaller than the price effect.
C)must balance with the price effect.
D)can be larger or smaller than the price effect.

Question

Quizplus · Accepted Answer

In a non-collusive oligopoly, firms reach a Nash equilibrium where the output effect balances with the price effect, as each firm maximizes profit given the output of others.

Assume Oligopoly Firms Are Profit Maximizers, They Do Not Form