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Do cost reductions in oligopolies usually lead to price reductions? a. always b. never c.   sometimes,...

Do cost reductions in oligopolies usually lead to price reductions?

a. always

b. never

c.   sometimes, if the government permits it

d. sometimes, but only if the oligopolists choose to use lower prices to expand the market and/or their market share

e. sometimes, if arbitrage can be eliminated

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Answer #1

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sometimes, but only if the oligopolists choose to use lower prices to expand the market and/or their market share.

A cost reduction will not necessarily mean a reduction in price , as it's is not a competitive market. If the producers choose to expand market share or market then the firms may choose to lower prices.

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