To maximize sales revenue, an oligopolist will expand output until the marginal revenue curve cuts the horizontal axis.

Question

Quizplus · Accepted Answer

This statement is true. An oligopolist will expand their output until the marginal revenue curve intersects the horizontal axis (becomes zero), as this is the point where they are producing at the profit-maximizing level of output. Beyond this point, the marginal cost of production would exceed the marginal revenue, leading to lower profits.

To Maximize Sales Revenue, an Oligopolist Will Expand Output Until