If a cartel is formed in order to maximize the total profits of its members, it will
a. charge the monopoly price, but produce more output than a monopoly would
b. produce the monopoly output, but charge a lower price than a monopoly would
c. charge the same price, and produce the same quantity that a monopoly would
d. charge a higher price and produce more output than a monopoly would
e. charge the monopoly price, but total output may be higher or lower than a monopoly's
C
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Suppose that $1 U.S. costs $1.50 Canadian. If in St. Louis a CD costs $10 U.S. and in Montreal it costs $15 Canadian, then ________
A) purchasing power parity holds B) Canadians will buy CDs in St. Louis C) Americans will buy CDs in Montreal D) Virgin Records will have an incentive to build more stores in North America
A good salesperson can sell $1,000,000 worth of goods, while a poor one can sell only $100,000 worth of goods. Job applicants know if they are good or bad, but the firm does not. A firm will offer job applicants a choice between a fixed salary and a 20% commission. Assuming risk-neutral salespersons and no opportunistic behavior, what level must the fixed salary be so that the firm can determine
a prospective good salesperson from a poor one? A) between $0 and $20,000 B) between $20,000 and $200,000 C) greater than $200,000 D) zero