Economic Theory

question 15

Multiple Choice

Economic theory

• A) is a set of definitions, postulates, and principles assembled in a manner that helps make cause-and-effect relationships clear in economics.
• B) is like a guidebook in that it points out what to look for.
• C) provides economists with a common language and way of thinking about how the world works.
• D) is all of the above.

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Definitions:

Cartel

An agreement among competing firms to control prices or exclude entry of a new competitor in a market, often to maximize overall profits.

Tacit Collusion

A situation where firms in the market indirectly coordinate actions by understanding common interests without explicit agreement, often leading to higher prices or less competition.

Marginal Costs

The additional cost incurred by producing one more unit of a good or service; this cost can vary with the level of production.

OPEC

The Organization of the Petroleum Exporting Countries, a group consisting of 13 of the world's major oil-exporting nations.