Which of the Following Would Make It Easier to Maintain

question 69

Multiple Choice

Which of the following would make it easier to maintain an effective collusive agreement in a cartel?

• A)An increase in the number of potential entrants into the industry.
• B)A decrease in the elasticity of demand for the cartel's product.
• C)An increase in the number of substitutes for the product produced by the cartel.
• D)A new method of pricing that makes it more difficult for each firm to monitor the prices that the other firms in the cartel are charging.

---

Definitions:

Marginal Cost Pricing

A strategy where the price of a good or service is set equal to the marginal cost of producing one more unit of it.

Monopolist

An individual or entity that has exclusive control over the supply of a particular good or service, enabling them to manipulate market prices.

Regulated

subject to rules, standards, and guidelines set by governing bodies to control activities, processes, or industries for safety, fairness, or efficiency.

Economic Efficiency

Economic efficiency is a state where resources are allocated in such a way that maximizes the production of goods and services at the lowest cost, thereby optimizing societal welfare.