For Firms in an Oligopoly,the Main Advantage of Explicit Collusion

question 1

Multiple Choice

For firms in an oligopoly,the main advantage of explicit collusion is that it

• A)removes much of the uncertainty about rivals' reactions.
• B)makes all firms more productively efficient.
• C)leads to greater product differentiation.
• D)reduces the cost per unit of advertising.
• E)eliminates the gains from cheating.

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Definitions:

Public Good

Nonexclusive and nonrival good; the marginal cost of provision to an additional consumer is zero and people cannot be excluded from consuming it.

Common Property Resource

A type of good consisting of natural or human-made resources where users have shared rights, often leading to problems of overuse or depletion.

Quota

A government-imposed trade restriction that limits the number, or monetary value, of goods that can be imported or exported during a specific time period.

Public Good

A product or service that is non-excludable and non-rivalrous, meaning its use by one individual does not reduce availability to others, and people cannot be effectively excluded from using the good.