An oligopoly with a dominant price leader will produce an output level that is than the output level that would prevail if the industry were a monopoly and sells it at a price that is than the price that would prevail if the industry were a monopoly.

A) higher; higher
B) higher; lower
C) lower; lower
D) lower; higher

Question

An oligopoly with a dominant price leader will produce an output level that is ________ than the output level that would prevail if the industry were a monopoly and sells it at a price that is ________ than the price that would prevail if the industry were a monopoly.

A) higher; higher
B) higher; lower
C) lower; lower
D) lower; higher

Vinicius Lamego · Accepted Answer

Final Answer : B, Explanation :  In an oligopoly with a dominant price leader, the output level is typically higher than in a monopoly because the dominant firm sets a price that its competitors follow, leading to more production overall. The price is lower than in a monopoly because the presence of competitors, even when following the price leader, creates pressure to keep prices more competitive than a single monopolist would.

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