Which of these situations produces the largest profits for oligopolists? a. The firms reach a Nash equilibrium. b. The firms reach the competitive outcome. c. The firms reach the monopoly outcome. d. The firms produce a quantity of output that lies between the competitive outcome and the monopoly outcome.

Question

Business

Brenna Golden

13 June, 19:34

Which of these situations produces the largest profits for oligopolists? a. The firms reach a Nash equilibrium. b. The firms reach the competitive outcome. c. The firms reach the monopoly outcome. d. The firms produce a quantity of output that lies between the competitive outcome and the monopoly outcome.

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Answers (1)

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Jair Stanton · Answer 1

c. The firms reach the monopoly outcome.

Explanation:

The oligopoly is a market structure with a small number of competitors that have all of most if not all of the sales in an industry. According to Nash theory, the equilibrium is reached when each competitor is doing the best it can given what its competitors are doing and have no incentive to deviate (acting all together as a monopoly).