Author Question: Economies of scale were initially seen between A) 1800 and 1840. B) 1970 and 1980. C) 1840 and ... (Read 110 times)

fasfsadfdsfa · **on:** Jun 30, 2018

Economies of scale were initially seen between
A) 1800 and 1840.
B) 1970 and 1980.
C) 1840 and 1910.
D) none of these choices.

Question 2

Why are successful collusive oligopolies rather short-lived?

IRincones · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

C

Answer to Question 2

It is difficult for firms of different size with different production costs and estimates of demand conditions to reach a collusive agreement. Once an agreement is reached, there is a great temptation for firms to cheat on the agreement for private gain. By undercutting the cartel price and increasing production, a cheating member may be able to boost profits significantly. In practice, cartel agreements are difficult to enforce--particularly since they are illegal under U.S. antitrust laws (as well as the laws of many other countries.) In addition, entry by new firms, or even potential entry, can undermine collusive agreements.