-If Two Duopolists Can Stick to a Cartel Agreement to Boost

question 42

Multiple Choice

-If two duopolists can stick to a cartel agreement to boost their prices, then both

• A) price below average total cost.
• B) make greater economic profits than if they did not collude.
• C) price at marginal cost.
• D) decrease their economic profits.
• E) increase their production so that each produces more than if they did not collude.

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Definitions:

Net-of-Tax Interest Expense

The interest expense after considering the effects of income tax, representing the actual cost of borrowing to the entity.

GAAP

Generally Accepted Accounting Principles; the standard framework of guidelines for financial accounting used in any given jurisdiction, including the rules and standards for financial reporting.

Fair Value

The approximate value for which an asset or liability might be traded between informed, willing participants in a fair deal.

Grant Date

The date on which an employee is given the option to purchase stock at a set price.