When the output affect is larger than the price effect, an oligopolist will

### The oligopolist will increase production.

## Step1: Understanding the Concepts of Output and Price Effect### In economics, the output effect refers to the change in quantity demanded due to a change in price, while the price effect refers to the change in total revenue due to a change in price. When the output effect is larger than the price effect, it means that the change in quantity demanded is greater than the change in total revenue.## Step2: Analyzing the Scenario### In an oligopolistic market, firms are interdependent and a change in price by one firm affects the decisions of other firms. If the output effect is larger than the price effect, it implies that the firm can sell more units of its product even if it lowers its price.## Step3: Making the Decision### Given the above scenario, the firm will increase its production. This is because by increasing production, the firm can sell more units, thus maximizing its profit.