If a cartel is unable to monitor its members and punish those firms that violate the agreement, then
A) the member firms will each act as price setters.
B) the cartel will prosper in the long run.
C) the market will become a monopoly.
D) the cartel will fail.
D
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Consider a downward-sloping demand curve. When the price of an inferior good increases, the income and substitution effects
A) work in the same direction to increase quantity demanded. B) work in the same direction to decrease quantity demanded. C) work in opposite directions and quantity demanded increases. D) work in opposite directions and quantity demanded decreases.
Which of the following pairs of goods would be expected to have a positive cross-price elasticity of demand?
A) coffee and tea. B) gasoline and large SUVs. C) tennis racquets and tennis balls. D) hot dogs and hot dog buns.