An agreement between the dominant firm and the fringe members to ...

[khang]

An agreement between the dominant firm and the fringe members to keep output low often breaks because:
 a. the fringe firms usually appropriate a larger share of the profits.
  b. the agreement is not self enforcing.
  c. the dominant firm usually appropriates a larger share of the profits.
  d. both have an incentive to charge a higher price for their output.

Question 2

If a monopolist is producing the output level at which price equals average total cost in the short run, then the firm is earning a normal profit.
 a. True
  b. False
  Indicate whether the statement is true or false

[micaelaswann]

Answer to Question 1

B

Answer to Question 2

True