In the dominant firm model of oligopoly, the dominant firm produces the quantity at which its marginal revenue equals

A. the price of the product.

B. zero.

C. its marginal cost.

D. its average total cost.

In the oligopoly's dominant firm model, the dominant firm produces the quantity at which its marginal revenue equals its marginal cost. Oligopolists use this strategy to maximize profits, whose outcome is P's equilibrium price and an equilibrium output of Q components. The dominant oligopolist faces competition from other oligopolists in the market. In return, it experiences a kinked demand curve. If dominant oligopolists decide to increase prices above the equilibrium price, other oligopolists in the market will not be compelled to increase costs too. It will cause the dominant oligopolist to incur an elastic market demand curve.