Collusion makes firms better off because if they act

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Applied Calculus for the Managerial, Life, and Social Sciences
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Chapter 5 / Exercise 78
Applied Calculus for the Managerial, Life, and Social Sciences
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84) Collusion makes firms better off because if they act as a single entity (a cartel) they can reduceoutput and increase their prices and profits. But some cartels have failed and others are unstable.Which of the following is a reason why cartels often break down?A) Most cartels do not have a dominant strategy.B) When a cartel is profitable the amount of competition it faces increases.C) Each member of a cartel has an incentive toʺcheatʺon the collusive agreement by producingmore than its share when everyone else sticks with the collusive agreement.D) Members of a cartel may resent having to share their profits equally.Answer: C
84)
Diff: 2Page Ref: 469-471/469-471Topic: CartelsLearning Outcome: Micro 16: Discuss the functions of cooperation, competition, and public policies inoligopoliesAACSB: Reflective Thinking25
We have textbook solutions for you!
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Applied Calculus for the Managerial, Life, and Social Sciences
The document you are viewing contains questions related to this textbook.
Chapter 5 / Exercise 78
Applied Calculus for the Managerial, Life, and Social Sciences
Tan
Expert Verified
Table 14-5Two rival oligopolists in the athletic supplements industry, the Power Fuel Company and the Brawny Juice Company, haveto decide on their pricing strategy. Each can choose either a high price or a low price. Table 14-5 shows the payoff matrixwith the profits that each firm can expect to earn depending on the pricing strategy it adopts.85)Refer to Table 14-5.If the firms act out of individual self-interest, which prices will they select?
85)
Diff: 2Page Ref: 463-464/463-464Topic: Game TheoryLearning Outcome: Micro 16: Discuss the functions of cooperation, competition, and public policies inoligopoliesAACSB: Reflective Thinking86)Refer to Table 14-5.Which of the following is true?
86)
Diff: 2Page Ref: 463-464/463-464Topic: Business StrategyLearning Outcome: Micro 16: Discuss the functions of cooperation, competition, and public policies inoligopoliesAACSB: Analytic Skills

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