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Author Question: Why do firms in oligopoly face a temptation to collude? What will be an ideal ... (Read 67 times)

CQXA

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on: Jun 29, 2018
Why do firms in oligopoly face a temptation to collude?
 
  What will be an ideal response?

Question 2

Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left, but the supply curve shifts less than the demand curve. As a result
 
  A) both the equilibrium price and quantity of MP3 players will decrease.
  B) the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease.
  C) both the equilibrium price and quantity of MP3 players will increase.
  D) the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will decrease.
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kilada

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Reply #1 on: Jun 29, 2018
Answer to Question 1

Firms in oligopoly face the temptation to collude because if they can successfully collude, they can boost their economic profit.

Answer to Question 2

C


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