Which of the following are true: a. Everything else being equal, the output leve

Question

Which of the following are true:

a. Everything else being equal, the output level is lower under monopoly than under oligopoly

b. Everything else being equal, the price is higher under monopoly than under oligopoly

c. Monopoly is associated with both higher consumer surplus and higher profits with respect to competition

d. Generally, firms try to differentiate their products from those of their competitors, in order to enjoymore market power.

e. According to the Cournot model, effective anti trust laws increase social welfare

f. An increase in the number of firms competing in a given industry will drive up the price of the product.

An explanation with them would help a lot! Thanks in advance!

Explanation / Answer

THe asnwer is A , B, D and E.

all these statement are correct. because, in statement A and B- the output level is lower under monopoly and price is generally high because , monopoly is a firm who has market power and he is price taker. so he only produce the output level where its marginal revenue is equal to marginal cost and by charging higher price to maximize its profits . thus monopoly maximize its profits by charging higher price and lower output where under oligopoly,where small number of firms have large majority of market share and thus they produce more and at charge lower price. and in statement D- it is the feauture of monopolistic competition market where many producer produce the the same good but differentiated in terms of qualtity or brand and thus they are not perfect subsitutites to each other.

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