Asked by alexis marie logan on May 16, 2024
Verified
Whenever a cartel in a duopoly breaks down,
A) both firms obtain higher profits.
B) total output in the market will rise.
C) price in the market will rise.
D) the socially optimal output will be produced.
Cartel Breakdown
The disintegration or failure of a cartel, which is an agreement among competing firms to control prices or exclude entry of a new competitor in the market.
Total Output
The total volume of goods and services produced by an economy over a specific period of time, also known as Gross Domestic Product (GDP).
- Investigate the function of collusion and cartels within market dynamics and their effects.
- Evaluate the effects on economic well-being resulting from different oligopolistic market configurations.
Verified Answer
KO
Kyley OlneyMay 20, 2024
Final Answer :
B
Explanation :
When a cartel in a duopoly breaks down, each firm starts to act independently to maximize its own profit, leading to increased competition. This typically results in increased production to capture more market share, thereby increasing total output in the market.
Learning Objectives
- Investigate the function of collusion and cartels within market dynamics and their effects.
- Evaluate the effects on economic well-being resulting from different oligopolistic market configurations.