A Cartel Is More Likely to Be Successful When

question 99

Multiple Choice

A cartel is more likely to be successful when:

• A) ?rms produce highly differentiated products.
• B) there are no barriers to entry or exit of ?rms.
• C) there are many ?rms in the industry.
• D) demand and costs in the industry are stable.

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Definitions:

Capital-allocation Line

A line on a graph that represents the risk-and-return profiles of risky assets, showing the possible combinations of risk and return that are available.

Efficient Frontier

A concept in modern portfolio theory representing a set of optimal investment portfolios that offer the highest expected return for a defined level of risk or the lowest risk for a given level of expected return.

Capital Asset Pricing Model

A model that describes the relationship between systemic risk and expected return for assets, particularly stocks, used to calculate a theoretically appropriate required rate of return for an asset, given its non-diversifiable risk.

Expected Rate

The anticipated return on an investment based on historical averages, interest rates, or economic indicators.