Two Duopoly Firms That Sell an Identical Good Form a Cartel

question 130

Multiple Choice

Two duopoly firms that sell an identical good form a cartel. They decide to collude and fix the price of their good. In this prisoners' dilemma type situation, the likely outcome is

• A) only one will cheat.
• B) neither one will cheat.
• C) both will cheat.
• D) It is impossible to say.

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Definitions:

Predictive

Relating to the ability to forecast future events, trends, or behaviors based on current or past data.

Correlation Scores

Numerical measures that indicate the extent to which two variables fluctuate together.

0 And 1

The binary numbers used in digital computing and binary code, representing the off and on states, respectively.

0 And 10

In the context of scales, '0 and 10' often refer to the endpoints of a Likert scale used in questionnaires, where '0' might represent 'strongly disagree' and '10' 'strongly agree.'