Question

multiple choice question
which statement is true about oligopolies?
o they do not achieve allocative efficiency because their average total cost exceeds price.
o they do not achieve allocative efficiency because their price exceeds marginal cost.
o they achieve productive efficiency because their marginal revenue equals marginal cost.
o they achieve allocative efficiency because they produce at minimum average total cost.

Explanation:

Allocative efficiency occurs when price equals marginal cost. In oligopolies, firms have market - power and set prices above marginal cost. Productive efficiency is when production occurs at minimum average total cost, and marginal revenue equals marginal cost is a profit - maximization condition, not directly related to productive or allocative efficiency.

Answer:

They do not achieve allocative efficiency because their price exceeds marginal cost.