Oligopolies tend to set prices:
A) higher than monopolies.
B) higher than cartels.
C) lower than monopolies but higher than competitive markets.
D) that equal marginal cost.

Question

Quizplus · Accepted Answer

Oligopolies have market power, which allows them to set prices higher than competitive markets but lower than monopolies. However, they still have the ability to charge prices above marginal cost, resulting in higher prices than in a perfectly competitive market. Monopolies have the highest ability to set prices as they have complete control over the market, while cartels involve collusion among firms to reduce competition and set even higher prices.

Oligopolies Tend to Set Prices