Which of the following is correct? When oligopolies collude they make lower prof
ID: 2494960 • Letter: W
Question
Which of the following is correct? When oligopolies collude
they make lower profits and consumers of the product are worse off.
they make higher profits but consumers of the product are worse off.
they make lower profits and consumers of the product are better off.
they make higher profits and consumers of the product are better off.
a.they make lower profits and consumers of the product are worse off.
b.they make higher profits but consumers of the product are worse off.
c.they make lower profits and consumers of the product are better off.
d.they make higher profits and consumers of the product are better off.
Explanation / Answer
Which of the following is correct? When oligopolies collude:
b. they make higher profits and consumers are worse off.
(Collusion is often explained by a desire to achieve joint-profit maximisation, higher profits increases producer surplus).
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