When an oligopolist independently determines its production quantity to maximize profits, how does its output compare to that of a monopoly and a perfectly competitive market?

Show Answers

It produces a quantity greater than a monopoly but smaller than that of a competitive market.It produces less than a monopoly but more than a perfectly competitive market.It produces less than both a monopoly and a perfectly competitive market.It produces more than both a monopoly and a perfectly competitive market.It produces the same quantity as a monopoly.

Explanation

An oligopolist's profit-maximizing output lies between the monopoly and competitive market levels. It produces more than a monopoly, which restricts output to raise prices, but less than a perfectly competitive market, where firms produce at maximum efficiency and output.