For Firms in an Oligopoly, the Main Advantage of Explicit

question 95

Multiple Choice

For firms in an oligopoly, the main advantage of explicit collusion is that it

• A) eliminates the gains from cheating.
• B) leads to greater product differentiation.
• C) reduces the cost per unit of advertising.
• D) removes much of the uncertainty about rivals' reactions.
• E) makes all firms more productively efficient.

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Definitions:

Utility Function

A mathematical model in economics that represents how different quantities of goods or services can provide satisfaction to consumers.

Income

The reward garnered over time, generally in a consistent pattern, from occupational or investment sources.

Expected Utility Function

A concept in economics that predicts the utility or satisfaction a rational individual expects to receive from different outcomes, used in decision making under uncertainty.

Sure Payment

A guaranteed payment, often referring to financial transactions where the payer is obligated to pay a certain amount.