The Figure Below Shows the Result of a Price Fixing

question 28

Multiple Choice

The figure below shows the result of a price fixing scheme that raised price above competitive levels at point C to a price of $15 at point M. Answer Questions using this figure
-By forming this price-fixing cartel, producers gained $__________ of producer surplus, while consumers lost $__________ of consumer surplus.

• A) $15,000; $10,000
• B) $15,000; $20,000
• C) $20,000; $10,000
• D) $20,000; $5,000

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Definitions:

Framing Effects

Cognitive biases where people react differently based on how choices or information are presented or "framed" to them.

Behavioral Economists

Behavioral economists study how psychological, cognitive, emotional, cultural, and social factors affect economic decisions of individuals and institutions.

Brand Loyalty

The tendency of consumers to continuously purchase the same brand's products over competitors due to preferences, satisfaction, or perceived value.

Monopoly Power

The ability of a single entity to control a significant portion of the market and influence price or output levels.