For a cartel to work, demand for the cartel's product must be
A. inelastic.
B. unit elastic.
C. perfectly elastic.
D. elastic.
Answer: A
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Fill in the blank: a combination of two goods that lies beyond the production possibilities frontier ________
A) can be produced with the current set of resources B) cannot be produced with the current set of resources C) can never be produced with any set of resources D) can be produced but only if the producer becomes more greedy
International price discrimination for a good is possible if
A) goods are sold through the gray market. B) the price difference between two countries is greater than the transaction costs in arbitrage. C) the price difference between two countries is less than the transaction costs in arbitrage. D) None of the above.
Suppose a buyer and a seller agree to split the cost of hiring an interpreter who charges $4 per transaction. The seller's opportunity cost is $35, while the buyer values the good at $45 . If the gains from this transaction are split equally between the buyer and the seller, how much will each gain from this transaction?
a. $10 b. $4 c. $3 d. $5
Under average-cost pricing, an increase in the monopolist's production cost will:
A. decrease its profit because its profit per unit decreases. B. not affect its profit because the government adjusts the regulated price equal to the average cost. C. increase its profit because the monopolist can reduce the average cost at a greater output level. D. None of these