If a Cartel Firm Is Producing a Quantity at Which

question 88

Multiple Choice

If a cartel firm is producing a quantity at which the marginal revenue is $2 and the marginal cost is $2, the firm________ .

• A)is producing the agreed upon quantity
• B)has acted in self- interest
• C)is producing less than the agreed upon quantity
• D)has erected a barrier to entry

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Definitions:

Net Present Value

A method of evaluating investments by calculating the present value of all expected future cash flows, minus the initial investment cost.

Rate of Return

A measure of the gain or loss on an investment over a specified period, expressed as a percentage of the investment's initial cost.

Desired Rate

An anticipated rate of return on investment or interest rate target, often set as a benchmark for financial decisions or investment appraisal.

Present Value Index

A calculation used to assess the profitability of an investment relative to its current cost, by discounting future cash flows.