As the number of firms in an oligopoly increases,
A)the output effect decreases.
B)the monopoly outcome becomes more likely.
C)the total quantity of output produced by firms in the market gets closer to the socially efficient quantity.
D)the price of the product greatly exceeds marginal cost.

Question

Quizplus · Accepted Answer

In an oligopoly, as the number of firms increases, competition among them also increases. This leads to a situation where the total quantity of output produced by the firms gets closer to the quantity that would be produced in a perfectly competitive market, which is considered to be the socially efficient quantity.

As the Number of Firms in an Oligopoly Increases