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Author Question: The oligopoly dilemma is whether to ________. A. act together to restrict output and raise the ... (Read 50 times)

tichca

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on: Jun 29, 2018
The oligopoly dilemma is whether to ________.
 
  A. act together to restrict output and raise the price
  B. raise the price to the monopoly profit-maximizing price
  C. cheat on others in the cartel to take advantage of profit opportunities
  D. lower the price to the perfectly competitive price

Question 2

Why do you supposed that it is easier for a government to protect and maintain a domestic monopoly for a particular industry but next to impossible to accomplish if this firm operates internationally?
 
  What will be an ideal response?


GCabra

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

C Cheating on the others in the cartel will boost the cheater's profit as long as the other participants also do not cheat.

Answer to Question 2

Firms can be protected domestically by passing laws preventing entry into the industry. However, internationally this is next to impossible to do because of the harsh competition that the firm would likely face.


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