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
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