Under Which of the Following Market Conditions Is It Most

question 17

Multiple Choice

Under which of the following market conditions is it most difficult to maintain a cartel agreement?

• A)There are many firms in the industry and these firms have similar costs.
• B)There are many firms in the industry and these firms have different costs.
• C)There are few firms in the industry and these firms have similar costs.
• D)There are few firms in the industry and these firms have different costs.
• E)There are many firms in the industry and these firms produce homogeneous products.

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Definitions:

Conformity

The act of matching attitudes, beliefs, and behaviors to group norms or the influence of group pressure on individual actions.

Confederates

Individuals who appear to be participants in a study but are actually part of the research team, used to manipulate social interactions.

Self-Fulfilling Prophecy

A prediction that directly or indirectly causes itself to become true, due to positive feedback between belief and behavior.

Diffusion Of Responsibility

A sociopsychological phenomenon where individuals are less likely to take action or feel a sense of responsibility in the presence of a large group of people.