If Oligopolists Can Form a Cartel,their Profit-Maximizing Action Is to

question 19

Multiple Choice

If oligopolists can form a cartel,their profit-maximizing action is to

• A) act like monopolists with a number of plants or divisions, each of which is a member firm.
• B) have only the most efficient firm undertake production.
• C) produce at minimum average cost.
• D) allocate sales among the cartel members so that the average cost of each is the same.
• E) dramatically increase production.

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Definitions:

Supply

The total amount of a good or service available for purchase at any given price level in a market.

Producer Surplus

The difference between the amount a producer is willing to accept for a good and the actual price they receive.

Tacos

A traditional Mexican dish consisting of a folded or rolled tortilla filled with various mixtures, such as beef, cheese, vegetables, and spices.

Producer Surplus

The difference between what producers are willing to accept for a good versus what they actually receive, measured above the supply curve.