The equilibrium output produced by an oligopolistic firm is:Multiple select question.not allocatively efficient.allocatively efficient.not productively efficient.productively efficient.
Question
The equilibrium output produced by an oligopolistic firm is:Multiple select question.not allocatively efficient.allocatively efficient.not productively efficient.productively efficient.
Solution
The equilibrium output produced by an oligopolistic firm is typically:
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Not allocatively efficient: Allocative efficiency occurs when resources are distributed in such a way that no one can be made better off without making someone else worse off. In an oligopoly, firms often have market power which allows them to set prices above marginal cost, leading to allocative inefficiency.
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Not productively efficient: Productive efficiency occurs when a firm is producing at the lowest point on its average cost curve, meaning it is producing at maximum output for minimum cost. Oligopolistic firms, due to lack of competition, may not have the incentive to minimize costs and maximize output, leading to productive inefficiency.
So, the correct answers are "not allocatively efficient" and "not productively efficient".
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