Assume that firms in an oligopoly are currently colluding to set price and output to maximize total industry profit.If the oligopolies are forced to stop colluding,the price charged by the oligopolies would ________ and the total output produced will ________.

Question

Quizplus · Accepted Answer

When firms in an oligopoly stop colluding, the market becomes more competitive and each firm will strive to increase its market share. This will result in an increase in the total output produced as each firm produces more to increase its market share. However, since each firm is producing more, the market supply increases and this will cause the price to decrease. Hence, the answer is C.

Assume That Firms in an Oligopoly Are Currently Colluding to Set