In the long run, if new fringe firms with same cost structures as existing fringe firms enter the oligopoly market:
A)the dominant firm's ability to extract profit from the market decreases.
B)the fringe's ability to extract profit from the market decreases.
C)the fringe supply curve rotates leftward and downward.
D)the dominant firm's residual demand curve rotates rightward.

Question

Quizplus · Accepted Answer

As new fringe firms enter the market, the increased competition reduces the dominant firm's market power, thereby decreasing its ability to extract profit.

In the Long Run, If New Fringe Firms with Same