An important defence of oligopoly as a market structure is that
A) it is the most efficient available alternative when the minimum efficient scale is large.
B) it involves less allocative inefficiency than monopoly.
C) it is more productively efficient than monopoly.
D) it results in lower prices than perfect competition.
E) it generates less unused capacity than monopolistic competition.

Question

Quizplus · Accepted Answer

Oligopoly can be efficient in industries where the minimum efficient scale is large. This is because large firms can benefit from economies of scale, which can result in lower costs and higher output. Therefore, oligopoly can be a viable market structure in industries such as automobile manufacturing or airline transportation, where high fixed costs are needed to achieve minimum efficient scale.

An Important Defence of Oligopoly as a Market Structure Is