The conclusion that oligopoly is inefficient relative to the competitive ideal must be qualified because:

A) industry price leaders often select a price equal to marginal cost.
B) over time oligopolistic industries may promote more rapid product development and greater improvement of production techniques than if they were purely competitive.
C) increased output due to persuasive advertising may perfectly offset the restriction of output caused by monopoly power.
D) many oligopolists sell their products in monopolistically competitive or even purely competitive industries.

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KRISTIAN GUMMINGER · Accepted Answer

Final Answer : B, Explanation :  While oligopoly may not always achieve the level of efficiency that a perfectly competitive market would, it is important to recognize that oligopolistic industries may still foster innovation and development. This productivity can benefit consumers and the economy as a whole over the long run.

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