« previous next »

Author Question: Why do some firms in an oligopoly refrain from colluding? What will be an ideal ... (Read 36 times)

ahriuashd

  • Hero Member
  • *****
  • Posts: 535
on: Jun 29, 2018
Why do some firms in an oligopoly refrain from colluding?
 
  What will be an ideal response?

Question 2

Refer to the scenario above. Arthur should place a bid of ________.
 
  A) 187.50
  B) 200
  C) 225
  D) 250


samiel-sayed

  • Sr. Member
  • ****
  • Posts: 337
Reply #1 on: Jun 29, 2018
Answer to Question 1

There are two main reasons why firms may refrain from colluding. First, the nature of competition predicts that although the firms may have a verbal agreement that they will both set high prices, they may still engage in secret price cutting to capture more of the profits for themselves. Thus, although collusion is a great deal for oligopolists, it is difficult to sustain. Second, price fixing is illegal. The potential punishment for engaging in such actions has a strong discouraging effect.

Answer to Question 2

D


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Signs and symptoms that may signify an eye tumor include general blurred vision, bulging eye(s), double vision, a sensation of a foreign body in the eye(s), iris defects, limited ability to move the eyelid(s), limited ability to move the eye(s), pain or discomfort in or around the eyes or eyelids, red or pink eyes, white or cloud spots on the eye(s), colored spots on the eyelid(s), swelling around the eyes, swollen eyelid(s), and general vision loss.

Did you know?

Cocaine was isolated in 1860 and first used as a local anesthetic in 1884. Its first clinical use was by Sigmund Freud to wean a patient from morphine addiction. The fictional character Sherlock Holmes was supposed to be addicted to cocaine by injection.

Did you know?

Alzheimer's disease affects only about 10% of people older than 65 years of age. Most forms of decreased mental function and dementia are caused by disuse (letting the mind get lazy).

Did you know?

During the twentieth century, a variant of the metric system was used in Russia and France in which the base unit of mass was the tonne. Instead of kilograms, this system used millitonnes (mt).

Did you know?

Illness; diuretics; laxative abuse; hot weather; exercise; sweating; caffeine; alcoholic beverages; starvation diets; inadequate carbohydrate consumption; and diets high in protein, salt, or fiber can cause people to become dehydrated.

Firms Incorporated into U.S. Steel Firms Incorporated into U.S. Steel
Cultures Ideal Body Types Cultures Ideal Body Types
The Number of Children Americans Think Are Ideal The Number of Children Americans Think Are Ideal
A very light ideal spring stretches by when it is used to hang a 135-N object. What is the ... A very light ideal spring stretches by when it is used to hang a 135-N object. What is the ...
Competitive firms and maximization Competitive firms and maximization
Competitive firms and maximization Competitive firms and maximization
Video: Language Areas Animation

For a complete list of videos, visit our video library