Once a cartel determines the profit-maximizing price
A) each firm faces the temptation to cheat by raising its price.
B) each firm faces the temptation to cheat by lowering its price.
C) changes in the output of any member firm will not affect the market price.
D) entry into the industry by rival firms will not affect the profit of the cartel.
B
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George was assigned to read a chapter in economics tonight, but he has a math exam tomorrow. He chooses to study for the math exam and postpone his economics studies until after the exam. What is the opportunity cost of George's decision?
A) The lower math grade he would have received had he not studied for the math exam B) The economics knowledge he sacrificed by not reading the assigned chapter C) Both A and B above D) Without information regarding the price of the textbook and the value to George of the math exam, George's opportunity cost cannot be determined.
An increase in the real interest rate is an example of a
A) pure substitution effect. B) substitution effect and a positive income effect. C) substitution effect and a negative income effect. D) substitution effect and an income effect whose sign depends on whether the consumer is initially a borrower or a lender.