It is often observed that the prices charged for gasoline by the various gas stations in a particular city tend to move together very closely. Is this an example of tacit collusion that should be prosecuted in the United States? Why or why not?
What will be an ideal response?
Many people want to argue that the observed movements of gasoline prices are evidence that gas stations are colluding with one another, at least tacitly. This, however, ignores the fact that there is generally a large number of competing gas stations, especially in medium and larger size cities. It is more likely the case that the significant amount of competition among gas stations is what is forcing the prices to move together. As such, it would be fairly difficult, if not impossible, to successfully bring charges of tacit collusion against these firms.
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You decide to drive your car on a long road trip of 1,500 miles. The opportunity cost of driving your car:
A. is the amount of money spent on gas. B. is zero because the car is paid for. C. includes lost wages you could have earned instead of driving. D. the total expenses of the trip in the end.
The rate of inflation over time records the absolute change in the average cost of purchasing a basket of goods and services
a. True b. False Indicate whether the statement is true or false
Why do oligopolists (or cartel members) have an incentive to cheat on collusive agreements designed to maximize the joint profits of the firms in the industry?
a. Individual firms could gain if they charged a price greater than the industry's profit-maximizing price. b. The industry demand curve is more elastic than the demand curve confronting each of the firms in the industry. c. The firms would like to see the industry produce a larger output and charge a lower price. d. The demand curve confronting the individual firms is more elastic than the market demand curve for the product.
Usury laws are a form of price __________.
Fill in the blank(s) with the appropriate word(s).