When Oligopolistic Firms Collude to Maximize Their Joint Profits, in Comparison

question 86

Multiple Choice

When oligopolistic firms collude to maximize their joint profits, in comparison with the situation in competitive markets, their actions generally lead to

• A) a larger output and lower prices.
• B) a smaller output and higher prices.
• C) a smaller output and lower prices.
• D) the same output and higher prices.

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Definitions:

Substitution Effect

The change in the consumption of goods that results from a change in their relative prices, holding the consumer's level of utility constant.

Income

Compensation acquired from job employment or the act of investing, usually in a regular pattern.

Price

The expected financial outlay, required, or dispensed in payment for something.

Claret

A red wine from Bordeaux, France, or a wine of similar character from elsewhere.