Why do oligopolists (or cartel members) have an incentive to cheat on collusive agreements designed to maximize the joint profits of the firms in the industry?
a. Individual firms could gain if they charged a price greater than the industry's profit-maximizing price.
b. The industry demand curve is more elastic than the demand curve confronting each of the firms in the industry.
c. The firms would like to see the industry produce a larger output and charge a lower price.
d. The demand curve confronting the individual firms is more elastic than the market demand curve for the product.
D
You might also like to view...
Markets tend to produce too little of an excludable public good because
A) transaction costs are high. B) of the lack of rivalry. C) these goods are depletable. D) All of the above.
Refer to the above table. Assuming that opportunity costs are constant, which of the following is a correct statement?
A) The United States has a comparative advantage in computers. B) The United States has a comparative advantage in bicycles. C) Mexico has a comparative advantage in computers. D) Mexico has a comparative advantage in both goods.