NAME SECTION PRINT LAST NAME, FIRST NAME 7. Historically, the success of cartels
ID: 1120511 • Letter: N
Question
NAME SECTION PRINT LAST NAME, FIRST NAME 7. Historically, the success of cartels has been limited by: a. b. c. d. the lack of close substitutes for the output of cartel members. nonmembers charging prices greater than cartel members. members that produce significantly less than their assigned quotas. incentives by members to cheat on the collusive agreement. 8. An individual firm in an oligopolistic industry in the U.S. generally: a. can earn positive economic profit in the long run due to the existence of barriers b. will not benefit from marketing and advertising because other firms sell similar c. earns zero economic profit in the long run because there are no barriers to d meets with rival firms to discuss the best price to charge to generate the largest to entry such as economies of scale. products possible industry profit. Suppose Bobby's Bait Company is an oligopolistic producer of fishing lures. Bobby's produces at the profit-maximizing level of output, and the price it receives on all the items it produces is below average total cost of production, but above average cost. Bobby's is: a. making a short-run economic profit. b. making a normal profit in the short run. c. incurring a short-run economic loss, but is minimizing its losses by producing in 9. variable the short run. incurring a short-run loss that is so substantial that it should shut down production immediately to minimize its losses. d. 10. Behavior in which a dominant firm's pricing strategy is followed by other firms in the industry is called: a. oligopoly power. b. contestable behavior. c. price leadership. d. cartel membership. Chapter 14 Assignments 302Explanation / Answer
Answer:- historically the success of cartels has been limited by
Correct Answer:- incentives by members to cheat on the collusive agreement
Reason:- The incentive to cheat the cartel to get the benefit of selling at a lower price is the main reason behind the failure of cartels.
Answer:- An individual firm in an oligopolistic industry in the US generally
Correct Answer:- can earn positive economic profit in the long run due to the existence of barriers to entry such as economies of scale
Reason:- Barriers to entry facilitate the profit-making opportunity to the firms in long run operating in oligopoly.
Answer:- Suppose Bobby's bait company is an oligopolistic producer of fishing lures. He produces at the profit-maximizing level of output and the PRICE is below ATC, but above AVC
Correct Answer:- incurring a short run economic loss, but is minimizing its losses by producing in the short run
Answer;- Behavior in which a dominant firm's pricing strategy is followed by other firms in the industry is called
Correct Answer;- price leadership
Reason:- price leadership occurs when the pricing policy of a firm is adopted by other firms.
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