Suppose a perfectly competitive market is taken over by three or four firms.What result would we expect regarding market output and the price of the product

Question

Quizplus · Accepted Answer

When a perfectly competitive market is taken over by three or four firms, they become oligopolies. Oligopolies tend to reduce market output and increase prices as they have more control over the market. The firms may engage in collusion or competition to increase prices and reduce output. Therefore, the correct answer is C, a decrease in market output and an increase in the price of the product.

Suppose a Perfectly Competitive Market Is Taken Over by Three