Carson Bell and Renee Dohr own the only two firms in the United States that sell a unique herbal vitamin supplement that has no close substitutes. They plan a secret meeting at the National Zoo in Washington, DC, to form a cartel in order to increase
their profit. a . How do they determine the price of their good? b. Do Carson and Renee have an incentive to cheat on their agreement with each other? Explain. c. How could Carson or Renee cheat?
a . They should behave as if the industry is monopolized and select the price and output combination that
would maximize the monopoly's profit.
b. A firm in a cartel can increase its profit if it cheats on the agreement and produces more than the
agreed amount. Therefore, Carson and Renee each have an incentive to cheat, causing their cartel to
break down.
c. They may try to cheat by selling output under different brand names or labels, or by invading restricted
markets by giving secret price concessions to other firms' customers.
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Answer the following statement true (T) or false (F)
Yolanda received a $100 savings bond for her birthday. The bond pays $100 at maturity, which is in five years. If the interest rate is 3%, the bond has a present value of $86.26
Indicate whether the statement is true or false
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c. equals aggregate income minus the statistical discrepancy. d. equals GDP minus depreciation.
After the terrorist attacks on September 11, 2001, the United States began devoting substantial resources toward the War on Terrorism, homeland security, and relief efforts. Use the production possibilities curve to demonstrate how this might affect the production of other goods in the United States