Oscar -Oscar and Felix Are the Only Firms That Clean Offices

question 103

Multiple Choice

Oscar

-Oscar and Felix are the only firms that clean offices in a large city. They agree to operate as a cartel. The payoff matrix above gives the economic profit that each firm can make. If Felix cheats on the agreement but Oscar complies, Felix makes an economic profit of _______ and Oscar makes an economic profit of _______.

• A) $12 million; - $2 million
• B) $10 million; $10 million
• C) $1 million; $1 million
• D) - $2 million; $12 million

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Definitions:

Surplus

A condition where the quantity supplied of a product exceeds the quantity demanded at the market price.

Rent Control

A government policy or law that limits the amount landlords can charge for leasing a home or apartment to prevent rapid increases in housing costs.

Equilibrium Prices

The market price at which the quantity of a good or service demanded equals the quantity supplied, leading to market balance.

Rental Housing

This term refers to properties available for rent, providing accommodation to individuals or families in exchange for regular payments to the owner or landlord.