57. There is no general theory of oligopoly because a. barriers to entry are mod

Question

57. There is no general theory of oligopoly because
a. barriers to entry are moderate to high in an oligopoly market.
b. oligopolists must take the potential reactions of rival firms into account when
making price and output decision.
c. there are economies of scale over the relevant range of output.
d. both a and b
e. all of the above

58. An oligopolist in long-run equilibrium
a. charges a price higher than long-run marginal cost.
b. earns exactly a normal rate of return.
c. always produces the level of output at which long-run average cost is
minimum.
d. both a and b
e. both a ande
59. In which of the following markets are economic profits possible in the long run?
a. monopoly
b. monopolistic competition
c. oligopoly
d. both a and c
e. all of the above
60. Which of the following is NOT a form of cooperative oligopoly?
a. product differentiation
b. organization of a cartel
c. tacit collusion
d. price leadership
e. none of the above

Explanation / Answer

57. There is no general theory of oligopoly because oligopolists must take into account the potential reactions of rival firms. Since modeling these reactions in a general model is difficult, there exists no general theory of oligopoly. Hence the correct answer is (B).

58. The correct answer is (A) i.e an oligopolist in a long run equilibrium charges a price higher than the long run marginal cost.

59. Economic profits are possible in the long run in both monopoly and oligopoly. Hence the correct answer is (D).

60. Product differentiation is not a form of cooperative oligopoly. It is a characteristic of monopolistic competition. Hence the correct answer is (A).

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