A cartel is defined to be
A) any oligopolistic industry with fewer than 4 firms.
B) a form of oligopoly in which firms agree to sell at different prices like in monopolistic competition.
C) a form of oligopoly in which firms formally agree to establish a common strategy, often a common price, in effect acting like a monopoly.
D) a form of oligopoly in which firms agree to compete with each other on an equal basis.
C
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A contractionary fiscal policy negates some of the leftward shift of the aggregate demand curve because the resulting fall in interest rates
A) increases the quantity of investment, raises the exchange rate and boosts net exports. B) discourages savings, decreases the quantity of investment, raises the exchange rate, and reduces net exports. C) increases the quantity of investment, lowers the exchange rate, and boosts net exports. D) discourages savings, increases consumption, and reduces the quantity of investment and imports.
Explain why a monopolistically competitive firm would not want to reduce its price all the way to its minimum average total cost even though doing so would allow it to increase sales?
What will be an ideal response?