Asked by Krishna Sriharsha Maramganti on May 23, 2024
Verified
How does free trade relate to the theory of oligopoly?
Free Trade
An economic policy that allows imports and exports between countries with minimal or no tariffs, quotas, or prohibitions.
Oligopoly
A market structure characterized by a small number of firms whose decisions affect and are affected by each other.
- Comprehend the role of free trade and competition in oligopolistic markets.
Verified Answer
AG
Akeisha GidronMay 28, 2024
Final Answer :
Free trade increases the number of producers of a product, which keeps prices closer to marginal cost. The more producers there are in a market, the more difficult it will be for firms to collude. Because collusion moves the market price and quantity away from socially optimal levels, free trade enhances social welfare.
Learning Objectives
- Comprehend the role of free trade and competition in oligopolistic markets.
Related questions
A Free Market Economy Relies Heavily on Which of the ...
_______ Represents a Natural Force That Guides Free Market Capitalism
The Monopolist and the Perfect Competitor Are Similar in That ...
A Monopoly Faces the Entire ___________ Schedule of an Industry
Matt Has a Monopoly Producing Glass Baseball Bats ...