Each member of a cartel
a. faces a temptation to cheat on the agreement because lowering its price slightly below the established price will usually increase the firm's sales and profit
b. faces a temptation to cheat on the agreement because raising its price slightly above the established price will usually increase the firm's sales and profit
c. has no temptation to cheat on the agreement because lowering its price slightly below the established price will usually have no impact on the firm's sales and profit
d. has no temptation to cheat on the agreement because raising its price slightly above the established price will usually decrease the firm's sales and profit
e. has no temptation to cheat on the agreement because lowering its price slightly below the established price will usually lower the firm's sales and profit
A
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Answer the following statements true (T) or false (F)
1) In a successive monopoly structure, if distributor has a constant marginal cost, the wholesale demand curve will lie below the retail marginal revenue curve. 2) Vertical integration is not an economically sound decision in a successive monopoly situation. 3) Vertical integration of a monopoly and a perfectly competitive firm does not yield greater economic profit. 4) If double marginalization exists between an upstream firm and a downstream firm, the vertical integration of the two firms will generate more economic profit. 5) The wholesale demand for a monopoly retailer depends of the retailer's marginal revenue.
In the absence of transactions costs, a change in property rights will have no effect on economic efficiency. This result is known as
a. the Weak Coase Theorem. b. the Strong Coase Theorem. c. the Invisible Hand Theorem. d. the Good Samaritan Theorem.