Asked by
Tyler Hockey
on Nov 05, 2024
Verified
Assume that firms in an oligopoly are currently colluding to set price and output to maximize total industry profit. If the government forces the oligopolists to stop colluding, the price charged by the oligopolies will ________ and the total output produced will ________.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
Colluding Oligopoly
A market situation where a small number of firms agree to manipulate market conditions, such as price or output, for mutual benefit.
Industry Profit
The total earnings before tax and interest of firms within a particular industry, after all expenses have been deducted from revenues.
- Gain insight into the market processes and effects when faced with a collusive oligopoly.
- Evaluate the impact of government intervention on collusion and price fixing.
Verified Answer
MN
Learning Objectives
- Gain insight into the market processes and effects when faced with a collusive oligopoly.
- Evaluate the impact of government intervention on collusion and price fixing.