There Exists an Incentive to Cheat on a Collusive Agreement

question 80

Multiple Choice

There exists an incentive to cheat on a collusive agreement as long as

• A)price equals marginal cost.
• B)price equals marginal revenue.
• C)price exceeds marginal cost.
• D)price is above minimum average total cost.
• E)none of the above.

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Definitions:

Cost of Capital

The necessary rate of gain a company must obtain from its investments to keep its market price constant and attract financial support.

Project Risk

The potential for losing time, quality, or resources in the pursuit of a project’s objectives.

Security Issued

Financial instruments that are offered for sale by a corporation or a government entity, typically in the form of stocks or bonds.

Cost of Equity

The return that investors require for an investment in a company, representing the compensation for the risk taken.