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Which of the following statements is (are) correct? (x) In order to be successful a cartel must agree on the total level of production but each member of the cartel is allowed to independently

Which of the following statements is (are) correct?
(x) In order to be successful, a cartel must agree on the total level of production but each member of the cartel is allowed to independently choose how much to produce.
(y) Often times, laws encourage explicit collusive agreements among competing firms in order to generate excessive profits to all of the firms that entered the agreement.
(z) Cartels are difficult to maintain because cartel agreements are difficult to enforce if firms decide to cheat on the agreement and produce more than the amount specified in the agreement.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (z) only

11. Which of the following is MOST likely to be sold in an oligopolistic market?
A. wheat in Wichita, Kansas
B. a steak meal in New York City
C. electricity to residential customers in Mebane, North Carolina
D. new cars in Burlington, North Carolina
E. Both A and B. They are equally likely to be sold in an oligopolistic market.


12. Because each oligopolistic cares about its own profit rather than the collective profit of all the oligopolists together,
(x) the market as a whole will produce and sell a larger quantity than if the industry was monopolisitic.
(y) each typical firm will have higher individual profits than if there was an equal distribution of monopoly profits among all of the oligopolistic firms.
(z) society is better off because the actions of self-interested and profit-motivated businesses cause a higher amount of production and lower prices that benefit consumers.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only


13. , which of the following statements is (are) correct?
(x) Equilibrium prices in markets characterized by oligopoly are lower than in monopoly markets and higher than in perfectly competitive markets.
(y) The concept of a Nash equilibrium, when applied to an oligopoly situation, relies on the notion that each firm chooses its best strategy, given the strategies that other firms have chosen.
(z) A Nash equilibrium always occurs if firms pursue what is in the best interest of society.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (z) only

Feb 06 2020 View more View Less

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