Which Would Make It Easier to Maintain an Effective Collusive

question 244

Multiple Choice

Which would make it easier to maintain an effective collusive agreement in a cartel?

• A) the emergence of a number of potential entrant firms
• B) a decrease in the elasticity of demand for the cartel's product
• C) an increase in the number of substitutes for products produced by the cartel
• D) a new method of pricing that makes it more difficult for firms in the cartel to determine the prices at which other cartel members are selling their product

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Definitions:

Materials Quantity Variance

The discrepancy between what was actually used in terms of material for production and what was anticipated, times the standard cost for each unit.

Direct Material

Primary materials used in the making of a product that can be directly traced to the finished good.

Materials Price Variance

The difference between the actual cost of materials purchased and the expected (standard) cost, multiplied by the quantity of materials.

Labor Efficiency Variance

A measure used to assess the difference between the actual hours worked and the standard hours allotted to complete a task, multiplied by the standard hourly labor rate.