If There Is a Successful Collusive Agreement in a Duopoly

question 50

Multiple Choice

If there is a successful collusive agreement in a duopoly to maximize profit,

• A)the market price will equal the marginal cost of production.
• B)the market price will equal the average total cost of production.
• C)the price will be the same as the price in a perfectly competitive market.
• D)the price will be the monopoly price.
• E)the market marginal revenue will be the same as the demand curve.

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Definitions:

Exchange Gain

The profit resulting from foreign exchange transactions and the fluctuation in exchange rates, realizing a higher value in the home currency.

Net Loss

The amount by which total expenses exceed total revenues for a business during a specific period, indicating a financial loss.

Spot Rate

The current exchange rate at which a currency can be bought or sold for immediate delivery.

Exchange Gains

arise from holding foreign currencies and result from favorable changes in exchange rates, leading to an increase in the domestic currency value of the foreign currencies held.