As the number of firms in an oligopoly market a increases, the market approaches the competitive market outcome. b decreases, the market approaches the cartel outcome. c increases, the market approaches the monopoly outcome. d decreases, the market approaches the competitive market outcome.

Question

Brennen

Business

30 October, 19:27

As the number of firms in an oligopoly market a increases, the market approaches the competitive market outcome. b decreases, the market approaches the cartel outcome. c increases, the market approaches the monopoly outcome. d decreases, the market approaches the competitive market outcome.

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Answers (1)

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Alayna Armstrong · Answer 1

The correct answer is option a.

Explanation:

An oligopoly market is a market structure where there are a few firms in the market. Because of a few firms, there is a high degree of interdependence and competition in the market.

As the number of firm increases in such a market, the market approaches the perfectly competitive outcome where the output and price are socially optimal.

In a perfectly competitive firm, there is a large number of firms. As the number of firms increases, the output will move towards a competitive level.