Question

QUESTION 3

1. When firms decide to collude, no firm has an incentive to deviate from the deal.

   True

   False

QUESTION 4

1. When firms decide to collude, they are in effect agreeing to act as a monopolist.

   True

   False

QUESTION 5

1. The monopolist outcome results in less output and less efficiency than the Cournot outcome.

   True

   False

  

QUESTION 6

1. The perfectly competitive outcome results in more output and less efficiency than the monopolist outcome.

   True

   False

Answer 1

(Question 3) False

Collusion often may provide incentive to cheat.

(Question 4) True

Collusive outcome is similar to monopoly outcome.

(Question 5) True

(Question 6) False

The more competitive a market, the higher the output produced, the lower the price and the higher the efficiency. Perfect competition is the most competitive market, followed by Cournot duopoly and monopoly.