-In Figure 4

question 58

Multiple Choice

-In Figure 4.2, the reason that the increase in output from point A to B is much less than the increase in output from point B to C is that

• A)it always costs more money to increase output.
• B)small levels of production are often inefficient and that significant increases in production can occur thereafter at only a small additional cost.
• C)it is very difficult and very expensive to increase output once the capacity of the machinery has been reached.
• D)there is waste.

Explain the effects of cartel formation on output and profits in an oligopoly.

Understand the concepts of duopoly and how it fits within the broader category of oligopoly.

Analyze the strategic decisions firms must make in oligopolistic markets, including collusion, cheating in cartels, and price setting.

Understand the concepts of cartel formation and the implications of cheating within a cartel in duopoly markets.

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Definitions:

Normal Distribution

A bell-shaped distribution characterized by its mean and standard deviation, showing how data points are dispersed or spread out.

Chi-squared Probability Distribution

A distribution that represents the distribution of the sum of the squares of variables that are independent and normally distributed.

Normal Distribution

Another term for Gaussian distribution; a probability distribution that is symmetric around the mean, indicating that data close to the mean are more frequent than data far from the mean.

Variance

A measure of how much values in a dataset differ from the mean or average of the set, indicating the spread of the data.