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.

Question

Quizplus · Accepted Answer

In oligopoly, there are few firms that dominate a market and have the power to affect prices. Free trade can increase the number of firms in a given market, leading to increased competition and decreased prices for consumers. This can benefit all countries involved in free trade. Increased competition does not necessarily lead to larger deadweight losses, and the profit of each firm in an oligopoly does not necessarily increase with the number of firms in the market.

The Theory of Oligopoly Provides Another Reason That Free Trade