In a collusive oligopoly, joint profits are maximized when a price leader establishes price based on:
a. its own demand and cost schedules
b. the market demand for the product and the marginal costs of the various firms.
c. the market demand for the product and its own marginal cost schedule.
d. the demand curve faced by a typical competitor and its own marginal cost curve.
b
You might also like to view...
In the short run, which of the following rates of growth in the money supply is likely to lead to the lowest level of unemployment in the economy?
a. 3 percent per year b. 5 percent per year c. 7 percent per year d. 9 percent per year
Which of the following statements is correct?
A. Marginal social cost is the share of marginal cost caused by an activity that is paid for by the persons who carry out the activity. B. Marginal private cost is the share of marginal cost caused by an activity that is borne by persons other than those who carry out the activity. C. Marginal social cost is the sum of marginal private cost and incidental cost. D. Marginal private cost and incidental cost are one and the same.
Suppose the Canadian central bank wants to keep the exchange rate of the Canadian dollar with the U.S. dollar constant over time. An increase in the demand for Canadian goods by American residents will lead the Canadian central bank to
A. buy more Canadian goods with Canadian dollars. B. increase the demand for Canadian dollars in the foreign exchange market. C. sell American goods in exchange for Canadian dollars. D. increase the supply of Canadian dollars in the foreign exchange market.
In which of the following cartels is total cartel profit likely to be the highest?
A) a cartel made up of equal sized firms each producing different quantities of a differentiated product B) a cartel made up of firms of various sizes each producing different quantities of a homogeneous product C) a cartel made up of firms of various sizes each producing the same quantity of a differentiated product D) a cartel made up of identical firms each producing the same quantity of a homogeneous product