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 competitive and sells it at a price that is than the price that would prevail if the industry were competitive.

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 competitive and sells it at a price that is ________ than the price that would prevail if the industry were competitive.

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

brittney litton · Accepted Answer

Final Answer : D, Explanation :  In an oligopoly with a dominant price leader, the output level is typically lower than in a competitive market because the firms have some control over the market and can restrict output to increase prices. Consequently, the price is higher than it would be in a competitive market where firms have less control over prices and typically produce more, leading to lower prices.

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