Suppose That It Is Relatively Easy for New fiRms to Enter

question 42

Multiple Choice

Suppose that it is relatively easy for new firms to enter an industry. Some of the firms in this industry want to form a cartel. Which of the following is likely to be true?

• A) It would be relatively easy for the firms to form a cartel.
• B) The market power of the cartel is likely to be low.
• C) The industry exhibits substantial economies of scale.
• D) The marginal cost of production in this industry is likely to be low.

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Definitions:

Hernán Cortés

A Spanish Conquistador who led an expedition that caused the fall of the Aztec Empire and brought large parts of mainland Mexico under the rule of the King of Castile in the early 16th century.

Veracruz

Veracruz is a state in Mexico known for its significant role in the country's history, vibrant culture, diverse ecosystems, and as the site where Hernán Cortés landed in 1519, marking the start of Spanish conquest.

Gold

A precious yellow metallic element, highly valued for its rarity, malleability, ductility, and conductivity, often used in jewelry and as a standard for monetary systems.

Plains Indians

Indigenous peoples of the North American Great Plains, known for their nomadic lifestyle, equestrian culture, and reliance on the buffalo.