1.4.1 Explain whether you agree or disagree with the following statements:

a. In all oligopoly models except the contestable-market model, market concentration leads to output below the efficient level, and increasing output would create value that exceeds the social cost of the good. Therefore, profit-maximizing oligopolists have an incentive to increase output.

b. In most oligopolistic industries, positive profits attract new firms and thus increase output.