Consider the graph which illustrates the demand curve faced by an oligopolistic firm who is a member of a cartel
a. What is the most likely price agreed upon by the cartel?
b. What is the most likely quantity agreed upon by the cartel?
c. The perceived demand curve for this oligopolistic firm in a cartel appears kinked because
d. Determine which method or methods are used by c to ensure that members cooperate
a) Likely price = 70
b) Likely quantity = 15000
c) The demand curve is kinked because a price decrease by one firm is met be a price decrease by the rival firms but a price increase is not.
option(A)
d) The following methods are used by a cartel:
-closely monitoring cartel members behavior
-matching all price cuts but not increases
option(A) and (D)
Consider the graph which illustrates the demand curve faced by an oligopolistic firm
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18. Consider the demand curve faced by a firm of P = 20 – 2q, where P is price and q is quantity demanded. If the firm is currently charging P = 5, which statement is true? a. The firm is pricing where marginal revenue MR = 0 b. The firm should increase price is t hey wish to increase revenue. c. The firm is selling its output in the elastic range of the demand curve d. The firm should...
1. The following graph depicts the demand curve, marginal revenue curve, and marginal cost curve that an oligopolist faces. The firm is currently charging the cartel price, P*, and producing the cartel quantity, Q*. Suppose input prices fall and marginal cost decreases from MC1 to MC2. Based on this event alone, the firm depicted in the figure above will 2. Suppose one rental car company raises its prices and the rival car companies leave their prices unchanged. But when another...
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