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Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

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BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

As the number of firms in an oligopoly grows large, the industry approaches a level of output that is ___________ the competitive level and _______ the monopoly level.

a. less than, more than

b. more than, less than

c. less than, equal to

d. equal to, more than

To determine
Relevance of oligopoly.

Explanation

Option (d):

As the number of firms in an oligopoly grows large, the industry approaches a level of output that is equal to the competitive level and more than the monopoly level. That is, if the number of firms increases in an oligopoly market, it ultimately leads to the conversion to a competitive market. Competitive market is the market structure consisting of a large number of buyers and sellers selling homogeneous products. The increase in the number of firms in the oligopoly market will affect the total market outcome; it is somewhat equal to competitive and more than a monopoly market. Thus, the option “d” is correct.

Option (a):

As the number of firms in an oligopoly grows large, the total output of the market will increase, and it is equal to the competitive market...

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