In the dominant firm model of oligopoly,the dominant firm assumes that the other firms in the market:
A)will charge a higher price than it does.
B)will together produce a lower quantity of output than it does.
C)behave like competitive firms.
D)behave like monopolistic firms.

Question

Quizplus · Accepted Answer

In the dominant firm model of oligopoly, the dominant firm assumes that the other firms in the market behave like competitive firms. This means that the dominant firm assumes that the other firms will produce the same quantity of output as they would in a perfectly competitive market, and charge the competitive price. The dominant firm sets its price and quantity so as to maximize its profits, taking into account the behavior of the other firms in the market.

In the Dominant Firm Model of Oligopoly,the Dominant Firm Assumes