Why Do Oligopolists (Or Cartel Members) Have an Incentive to Cheat

question 178

Multiple Choice

Why do oligopolists (or cartel members) have an incentive to cheat on collusive agreements designed to maximize the joint profits of the firms in the industry?

• A) Individual firms could gain if they charged a price greater than the industry's profit-maximizing price.
• B) The industry demand curve is more elastic than the demand curve confronting each of the firms in the industry.
• C) The firms would like to see the industry produce a larger output and charge a lower price.
• D) The demand curve confronting the individual firms is more elastic than the market demand curve for the product.

Understand the importance of transparent motivations in the sale and purchase of businesses.

Understand the concept and valuation of goodwill in business acquisitions.

Grasp the fundamentals and applications of discounted cash-flow analysis.

Comprehend the importance and focus areas of the income statement method in business valuation.

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Definitions:

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Principles and moral beliefs that guide individuals' behaviors and decisions.

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The ability to understand, manage, and communicate one's feelings, as well as to navigate personal relationships with wisdom and empathy.

Intellect

The faculty of reasoning, understanding, and thinking critically and analytically.