Other things being equal, cartels and similar collusive arrangements are easier to establish and maintain: Multiple Choice during periods of cyclical stability and full employment. when the demand and cost conditions of the participating firms differ substantially. when there are ample opportunities for the firms to make secret price concessions to selected buyers. when the number of firms is relatively large.

Q16 Suppose we are referring to OPEC, the oil cartel. Which would make it easier to maintain an effective collusive agreement among OPEC members? Multiple Choice   the emergence of a number of potential entrant firms   a decrease in the elasticity of demand for the OPEC's oil    a new method of pricing that makes it more difficult for cartel members to determine the prices at which other cartel members are selling oil   an increase in the number of substitutes for the oil produced by the OPEC cartel   a pledge of allegiance to the cartel

When tacit collusion breaks down and prices collapse, the result is: a price war. formation of a cartel. price leadership. higher profits for the industry as a whole.

Which of the following methods could a cartel NOT use to prevent its member fırms from breaking their agreements? If a member fırm breaks its agreement, it is a breach of contract and the firm is subject to legal penalties. The cartel acts as a monopolist, maximizing the combined profits of all the member firms. All of the other choices could be used to prevent member firms from breaking agreements. The cartel requires member firms to structure executive pay in such a way that the executives benefit personally from preserving the cartel. If a member firm breaks its agreement, that firm is kicked out of the cartel permanently and can no longer earn cartel profits in the future.

Monopolistic competition is a market structure in which   Question 17 options:   firms compete on product quality, price, and marketing.   natural or legal barriers prevent the entry of new firms.   a small number of firms compete.   firms produce identical products.

Cartels have a difficult time maintaining their output agreements because an individual firm has an incentive to deviate (increase their output) from the arrangement.  T/F

question # 24-3  brief explanation

The inverse demand for a homogeneous-product Stackelburg duopoly is P=24000-5Q. The cost structures for the leader and the follower respectively are CL(QL)=3000QL and CF(QF)=4000QF.   a) What is the followers reaction function?   b) Determine the equilibrium output level for both the leader and the follower.   Leader output:   Follower output:   c) Determine the equilibrium markert price   $   d) Determine the profits of the leader and the follower.   Leader profits: $   Follower profits: $

In the industry structure there are no barriers to entry for new firms.