The theory of oligopoly provides another reason that free trade can benefit all countries because (i) as the number of firms within a given market increases,the price of the good falls.
(ii) increased competition leads to smaller deadweight losses.
(iii) profit increases with the level of competition for oligopoly firms.
A)(i) only
B)(ii) only
C)(i) and (ii)
D)(i), (ii), and (iii)

Question

The theory of oligopoly provides another reason that free trade can benefit all countries because (i)	as the number of firms within a given market increases,the price of the good falls.
(ii)	increased competition leads to smaller deadweight losses.
(iii)	profit increases with the level of competition for oligopoly firms.
A)(i) only
B)(ii) only
C)(i) and (ii)
D)(i), (ii), and (iii)

Quizplus · Accepted Answer

In oligopoly, increased competition (more firms) typically leads to lower prices and reduced deadweight losses, benefiting consumers and improving market efficiency. Profit does not necessarily increase with competition in oligopoly.

The Theory of Oligopoly Provides Another Reason That Free Trade