The Key Behavioral Assumption of the Cartel Theory Is That

question 40

Multiple Choice

The key behavioral assumption of the cartel theory is that oligopolists in the industry act as if

• A)all firms in the industry are the same size.
• B)all firms in the industry are price takers.
• C)there is a dominant firm in the industry and many fringe firms.
• D)there is only one firm in the industry.

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Definitions:

Long Run

A period of time in economics sufficient for all markets to adjust, including changes in production capacity and market entry or exit.

Short Run

In economics, a period in which at least one input is fixed and cannot be changed by the firm.

Firm's Output

The total quantity of goods or services produced by a company within a specific period.

Short Run

Refers to a time period in which at least one input (e.g., capital) is fixed, limiting the ability of a business to adjust to changes in market demand or production costs.