Two Duopoly Firms That Sell an Identical Good Form a Cartel

question 193

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) both will cheat.
• B) neither one will cheat.
• C) only one will cheat.
• D) It is impossible to say.

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Definitions:

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An agency that is typically located within the executive branch, under one of the cabinet-level departments. The agency head is appointed by the president with the advice and consent of the Senate and may be discharged by the president at any time, for any reason. Also called a cabinet-level agency.

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A United States federal statute that governs the way administrative agencies of the federal government may propose and establish regulations, ensuring transparency and fairness in the administrative process.