Author Question: What happens to the market outcome if cartel members cheat on the collusive agreement? A) Price ... (Read 88 times)

jilianpiloj · **on:** Jul 1, 2018

What happens to the market outcome if cartel members cheat on the collusive agreement?

A) Price declines, but firm-level quantities remain the same because the firms act like price takers
B) Price and quantity revert to the single-seller monopoly equilibrium outcome
C) Other firms raise prices so that the average market price remains unchanged
D) Price declines and quantity increases toward the perfectly competitive equilibrium

Question 2

A bilateral monopoly is characterized by a market with a single buyer and a single seller. Which factor is most likely to determine the market outcome in this situation?

A) Share of total costs that are fixed
B) Degree of demand elasticity
C) Degree of supply elasticity
D) Bargaining power of the firms