Asked by Nadia Patel on May 25, 2024
Verified
Statement I.Collusion is most likely to succeed when there are many firms in the industry.
Statement II.Firms in an industry that divide a market by territory make price and output decisions similar to the way a monopolist would operate.
A) Statement I is true and statement II is false.
B) Statement II is true and statement I is false.
C) Both statements are true.
D) Both statements are false.
Collusion
An agreement between firms to limit competition and manipulate markets in their favor, often in ways that are illegal or unethical.
Monopolist
A monopolist is an entity that has exclusive control over the supply of a particular good or service, facing no competition in its market.
- Determine the elements that contribute to the success or downfall of collusion within oligopolistic sectors.
Verified Answer
JH
Jabira HoldenMay 31, 2024
Final Answer :
B
Explanation :
Statement I is false because collusion is easier to maintain when there are fewer firms in the industry. With more firms, it becomes harder to enforce and monitor collusion agreements.
Statement II is true because territorial division allows firms to act as monopolies in their respective regions and make pricing and output decisions as if they were a single dominant firm.
Statement II is true because territorial division allows firms to act as monopolies in their respective regions and make pricing and output decisions as if they were a single dominant firm.
Learning Objectives
- Determine the elements that contribute to the success or downfall of collusion within oligopolistic sectors.
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