If the Government Regulates the Price a Monopoly Can Charge

question 52

Multiple Choice

If the government regulates the price a monopoly can charge, and the price ceiling is set below what the competitive market price would be, then

• A)there will be excess supply.
• B)there will be excess demand.
• C)producer surplus is maximized.
• D)consumer surplus is maximized.

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Definitions:

Collusive Oligopoly

A market situation where a few firms dominate the market and make coordinated efforts to control prices and market shares, often illegally or in violation of competitive practices.

Noncollusive Oligopoly

A market structure where a few dominant firms compete without any explicit agreements to fix prices or market shares, often leading to intense competition.

Homogeneous Oligopoly

An oligopoly in which firms produce a standardized product.

Homogeneous Oligopolists

Firms within an oligopolistic market selling products that are so similar that they are perfect substitutes for each other.