Price Fixing Tends to Fail in an Oligopoly Because

question 338

Multiple Choice

Price fixing tends to fail in an oligopoly because

• A) firms like to have flexibility in setting prices.
• B) each firm has an incentive to underprice the other firms.
• C) it increases the quantity demanded.
• D) consumers don't like fixed prices.

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Definitions:

Government Budget

An estimate of income and expenditure for a set period of time, outlining the financial plans and priorities of a government.

Nominal Interest Rate

indicates the percentage increase in money that the borrower pays the lender, not taking into account the eroding effects of inflation on the real value of the money.

Inflation Rate

The percentage rate at which the general level of prices for goods and services is rising, eroding purchasing power over time.

Real Interest Rate

The rate of interest an investor expects to receive after allowing for inflation, reflecting the true cost of borrowing and the true yield on investments.