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:

Trachea

In insects, air tube located between the spiracles and the tracheoles. In tetrapod vertebrates, air tube (windpipe) that runs between the larynx and the bronchi.

Cephalothorax

A body region found in certain arthropods, including spiders and crustaceans, that combines the head and the thorax into one unit.

Fangs

Long, pointed teeth typically found in venomous snakes used to inject venom, or in some mammals for grasping and tearing.

Deuterostome

Group of coelomate animals in which the second embryonic opening is associated with the mouth; the first embryonic opening, the blastopore, is associated with the anus.