Question 19 2 pts If an oligopolists fixed costs increase it

Question 19 2 pts If an oligopolist\'s fixed costs increase, its price will will and its profit 0? Increase; decrease Decrease; increase Increase; stay the same Stay the same; decrease

Solution

An oligopolist function at the point where the Marginal cost curve passes between the Marginal revenue curve and the price is set accordingly. If the change in the fixed cost doesn\'t change the complete cost structure of the oligopoly market the oligopoly will produce at the same price and its profit will be decreased. There is an interdependence in price setting and oligopoly will have to follow that.

The answer is \"D\", The price stays the same and the profit decrease.