The oligopoly price will be greater than marginal cost but less than the monopoly price when
A)the oligopolists collude by jointly choosing a quantity to produce and maintaining their agreement.
B)the oligopolists collude by jointly choosing a price to charge and maintaining their agreement.
C)each oligopolist individually chooses a quantity to produce to maximize profit.
D)each oligopolist's objective is minimization of average total cost, rather than maximization of profit.

Question

Quizplus · Accepted Answer

In an oligopoly where each firm independently chooses its quantity to maximize profit, the price is typically above marginal cost due to limited competition but below the monopoly price because firms do not fully collude to maximize joint profits.

The Oligopoly Price Will Be Greater Than Marginal Cost but Less