Question

As the number of sellers in an oligopoly increases The price in the market moves further from marginal cost The price in the market moves closer to marginal cost Output in the market tends to fall because each firm must cut back on production Collusion is more likely to occur because of larger number of firms can place pressure on any firm that defects

Answer 1

If there are more sellers (companies) in an oligopoly, the price in the market tends to move closer to the cost of making a product. This is because when there are more companies competing, it is harder for them to charge high prices without losing customers to their competitors. The increased competition may cause some companies to reduce what they produce. It is less likely that companies will secretly work together to manipulate prices when there are more companies.