Question

If oligopolists compete hard against each other,

A. they end up acting very much like imperfect competitors.
B. costs for all are driven up.
C. zero profits result for all.
D. they end up acting very much like monopolistic competitors.

Answer 1

C. zero profits result for all. In an oligopoly market, if the firms compete fiercely, they may end up acting like perfect competitors and earn zero economic profits.

Step-by-step explanation:

When oligopolists compete hard against each other, they may end up acting very much like perfect competitors, driving down costs and leading to zero profits for all. In an oligopoly market structure, a small number of large firms have most of the market share. Despite recognizing the benefits of acting like a monopoly, each individual oligopoly faces the temptation to produce slightly higher quantities and earn slightly higher profits, which can result in fierce competition and zero economic profits for all.