A cartel is often the result of: A. perfectly competitive firms that agree to produce a...
Question:
A cartel is often the result of:
A. perfectly competitive firms that agree to produce a homogeneous product.
B. oligopoly competitors that agree to restrict output to maximize joint profits.
C. a monopoly that has been regulated by the government.
D. a natural monopoly that has evolved into a perfectly competitive industry.
E. monopolistically competitive firms that have agreed to earn normal profits in the long run.
Models of Oligopoly:
Oligopoly is a market structure consisting of few large firms. These firms may decide to compete or collude. They may compete on price (Bertrand model) or compete on output (stackelberg and Cournot models).
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answerThe correct answer is: B). oligopoly competitors that agree to restrict output to maximize joint profits.
Cartel is formed when firms in an oligopoly...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
Oligopoly | Definition, Types & Examples
from
Chapter 4 / Lesson 16
114K
Learn what an oligopoly is and its market effects, and view examples of oligopolies. Understand non-price competition and how oligopolies affect price competition.
Related to this Question
- Firms in oligopoly face a temptation to form a cartel and collude because a cartel _____. a. allows firms to act like a monopoly and increase their profits. b. leads to a more competitive market. c. is a legal means of increasing economic profit d. is a s
- Suppose all of the firms in a perfectly competitive industry form a cartel and agree to restrict output, thereby raising the price of the product. Individual Firm A will gain the most from the existence of the cartel if: A) all firms, including A, coopera
- An agreement among firms to restrict production with the goal of earning economic profits is called a(n): A. pure monopoly B. oligopoly C. cartel D. duopoly
- A cartel is a. A group firms which get together and make joint price and output decisions to maximize joint profits b. Form of tacit collusion c. Type of oligopoly in which the curve is kinked d. Duopoly
- Oligopoly is ________. (a) like a monopoly because there are barriers to entry (b) like perfect competition because oligopoly firms all sell homogeneous goods (c) like monopolistic competition because oligopoly firms all sell differentiated goods (d) like
- The firms in an oligopoly have a collective incentive to compete or cooperate, in order to maximize joint profit or output? Individually, each firm has an incentive to compete or cooperate in order to maximize individual profit or output?
- Monopolistic competition means that: a. firms differentiate their output, which makes them price makers, but barriers to entry are low or nonexistent. b. firms are in perfect competition, but they collude similar to monopolies. c. oligopoly firms collude
- In the long run, profits in a monopolistic competition market are zero because: A. of government regulations B. of collusion C. firms are free to enter and exit the market D. firms produce a differentiated product
- Markup would generally be highest under: a. a monopoly. b. a cartel. c. an oligopoly. d. monopolistic competition. e. a competitive market
- Markup would generally be highest under: a. monopoly. b. a cartel. c. an oligopoly. d. monopolistic competition. e. a competitive market
- A cartel: a) is a group of firms, formally agreeing to control the price and the output of a product. b) has as its primary goal to reap monopoly profits, by replacing competition with cooperation. c)
- An industry dominated by a few mutually interdependent firms is A. monopoly B. oligopoly C. monopolistic competition D. monarchical oligarchy
- A perfectly functioning cartel results in: a. Oligopoly b. Monopoly c. Perfect competition d. Monopolistic competition
- When a group of firms collude with one another to produce at a monopoly output and sell at a monopoly price, you have: a. a pensioner's dilemma. b. a cartel. c. monopolistic competition. d. a duopoly.
- A cartel: A) has one firm that acts as the price leader. B) involves competition between rival firms. C) acts like a monopoly. D) prices its output equal to marginal cost. E) is a group of firms engaged in price discrimination.
- Firms have downward sloping demand curves in: A. Oligopolies and monopolies only B. Monopolies and oligopolies that collide only C. Perfectly competitive markets only D. All market structures except perfect competition
- One difference between oligopoly and monopolistic competition is that A. a monopolistically competitive industry has fewer firms. B. fewer firms compete in oligopoly than in monopolistic competition. C. in monopolistic competition, the products are identi
- A key characteristic of a competitive market is that: a. Government antitrust laws regulate competition, b. Producers sell nearly identical products, c. Firms minimize total costs, d. Firms have price-setting power,
- One of the reasons that the government discourages and regulates monopolies is that: A. producer surplus is lost and consumer surplus is gained. B. monopoly prices ensure productive efficiency but cost society allocative efficiency. C. monopoly firms do n
- When an oligopoly is in a cooperative equilibrium, which of the following is NOT true? A. The firms in the industry will jointly be earning monopoly profits B. No individual firm will have an incentiv
- In the long run, profits in a monopolistic competition market are zero because: A) of government regulations. B) of collusion. C) Firms are free to enter and exit the market. D) Firms produce a differ
- If two firms dominate an industry the market is known as: a. Monopolistic competition. b. Competitively monopolistic. c. Duopoly. d. Oligopoly. e. Monopoly.
- If an oligopoly does not cooperate and each firm chooses its own quantity, the industry will produce a quantity of output that is _ the _ competitive level and _ the _ monopoly level. a. less than, more than b. more than, l
- Long-run economic profits are possible under: a. Monopolistic competition and monopoly, b. Perfect competition and oligopoly, c. Oligopoly and monopoly, d. Monopolistic competition and oligopoly.
- Economics predicts that outcomes under monopoly, monopolistic competition and oligopoly lead to less output in the market, higher prices for consumers, and higher profits for producers compared to a p
- A cartel is an example of a ________ joint-profit maximization model in which firms work together secretly and operate like a monopoly. a. Perfectly competitive b. Collusive c. Monopolistically competitive d. Tit-for-tat
- Monopolistic competition means: A.) Firms are in perfect competition but they collude similar to monopolies B.) Firms differentiate their output, which makes them price-makers, but barriers to entry
- If an oligopolistic industry organizes itself as a cooperative cartel, it will produce a quantity of output that is _ the competitive level and _ the monopoly level. a. less than, more than b. more than, less than c. less than, equal to d. e
- In an oligopoly with a collusive agreement, the total industry profits will be smallest when A. the firms act as a monopoly. B. all firms comply with the agreement. C. all firms cheat on the agreement. D. one firm cheats on the agreement and the other fir
- One difference between monopolistic competition and oligopoly is that: a. monopolistic competition has fewer firms than oligopoly b. in monopolistic competition, the firms' outputs are identical c. oligopoly has fewer firms than monopolistic competition d
- An oligopoly market with only two firms is called: a) Monopoly b) Perfect competition c) Monopolistic competition d) Duopoly
- Monopolies like perfectly competitive firms maximize their profits where marginal revenue (MR) is equal to marginal cost (MC). The difference, however, is that the monopolist produces less goods for society (economically inefficient) at higher prices to t
- If an oligopoly does not cooperate and each firm chooses its own quantity, the industry will produce a quantity of output that is ___________ the competitive level and _______ the monopoly level. a. less than, more than. b. more than, less than. c. les
- A monopolistically competitive firm usually charges less than a monopoly firm because: a. it is part of a group of firms that have formally agreed to control the price and the output of a product. b. it faces some degree of competition due to low barriers
- Monopolies and monopolistically competitive firms differ in that monopolies: a. participate in markets where barriers to entry are present. b. differentiate their products. c. face competition from many other firms. d. none of the above
- 1. The level of competition least beneficial to business owners is: a. oligopoly b. monopoly c. pure competition d. monopolistic competition 2. Pure competition is a market structure that has: a
- Monopolistic competition differs from monopoly because in monopolistic competition: A) firms maximize profits. B) firms are free to enter and exit. C) firms set marginal revenue equal to marginal cost to maximize profit. D) All of the above are differe
- If an oligopolistic industry organizes itself as a cooperative cartel, it will produce a quantity of output that is ________the competitive level and _________ the monopoly level. a. less than, more than. b. more than, less than. c. less than, equal to
- If firms in an oligopoly successfully collude and cooperate, the equilibrium market quantity and market price will the same as what type of market structure? a. perfect competition b. monopolistic com
- If all firms in an industry can successfully collude and form a cartel, that industry becomes very similar to: a. a perfectly competitive industry. b. an oligopoly industry. c. a monopoly industry. d. a monopolistically competitive industry. e. a duopoly
- Monopolistic competition combines features of: A) oligopolies and monopolies. B) perfect competition and monopolies. C) elastic and inelastic goods. D) shortages and surpluses.
- The firms in an oligopoly market structure agree to collude because: a. it helps them to earn more profits. b. each firm wants to know the strategy of its rivals. c. each firm wants to charge a lower
- If a market is organized by a cartel, we can expect: A. normal profits for all cartel firms. B. an incentive for cartel firms to cheat on the cartel agreement. C. profit maximization by individual firms in the cartel. D. allocative efficiency. E. perfectl
- An industry with three firms selling a standardized or differentiated product would be called: A. a competitive industry. B. a monopolistically competitive industry. C. an oligopoly. D. a duopoly. E. a monopoly.
- Markup would not exist in A. a monopoly. B. a cartel. C. an oligopoly. D. monopolistic competition. E. a competitive market.
- A perfectly competitive market is one in which a. firms do not attempt to maximize profit. b. all firms produce the same level of output. c. all firms sell a homogeneous product. d. there are only a few firms in the industry.
- By setting price above marginal cost, monopolistic competitors always make price and output decisions that are similar to firms in _ _ _ _ _ _ _ _ . a. perfect competition b. monopoly c. oligopoly d
- In monopolistic competition: a. Firms face a perfectly inelastic demand curve. b. There is one supplier. c. Firms make differentiated products. d. There are barriers to entry to prevent entry. e. There is never government regulation.
- A two-firm oligopoly is called a: A) duopoly. B) cartel. C) monopolistic oligopoly. D) double monopoly. E) dual-market.
- A duopoly is a form of A. oligopoly. B. monopolistic competition. C. perfect competition. D. monopoly.
- Unregulated monopolies can often earn an economic profit in the long run because A. they have high costs. B. barriers to entry prevent competing firms from entering the market. C. they receive government subsidies. D. the risks of running a monopoly are h
- Because monopoly firms do not have to compete with other firms, the outcome in a market with a monopoly: a. is efficient b. is often not in the best interest of society c. maximizes total economic well-being d. benefits consumers more so than the producer
- Monopolistic competition and oligopoly are examples of: a. monopoly b. perfect competition c. theories of consumer behavior d. imperfect competition e. the extreme cases on the market structure continuum
- 1.Why is it that firms can earn profits in the long run in monopoly and oligopoly but not a monopolistic competition and perfect competition? 2. As the industry moves from being a monopoly to a monopolistically competitive one (due to the entry of new co
- In a typical cartel agreement, the cartel maximizes profit when it: a. behaves as a dupolist, b. Is flexible in enforcing production targets, c. behaves as a perfectly competitive firm, d. behaves as a monopolist.
- Graphically draw the profit maximizing, loss minimum zing, shut down cases for all market structures: a. Oligopoly b. Monopoly Competition c. Regulated Monopoly d. Perfect Competition
- Which of the following market structures describes an industry in which a group of firms formally agrees to control prices and output of a product? a. Perfect competition b. Monopoly c. Oligopoly d. Monopolistic competition e. Cartel
- In the long-run, economic profits are: a. always zero in monopolistic competition. b. never zero in monopoly. c. always positive in monopoly. d. never negative in oligopoly.
- Which of the following market structures describes an industry in which a group of firms formally agrees to control prices and output of a product? a. Perfect competition b. Monopoly c. Oligopoly d. Cartel e. Monopolistic competition
- In which of the following market structures can firms be price makers? a. monopoly, monopolistic competition, and oligopoly. b. perfect competition, monopolistic competition, and oligopoly. c. monopoly, perfect competition, and oligopoly. d. monopoly, mon
- What types of goods are traded within a monopoly, oligopoly, monopolistic competition, and pure competition?
- In an oligopoly market, a. a firm must lower price in order to sell more output. b. each firm faces a demand curve that depends on how the firm's rivals behave. c. a few firms account for a large portion of industry sales. d. Both a and b. e. All of the a
- As the number of firms in an oligopoly grows large, the industry approaches a level of output that is _ the competitive level and _ the monopoly level. a. less than, more than b. more than, less than c. less than, equal to d. equal to, mor
- When oligopoly firms collude to raise prices: A. each firm benefits, but society loses. B. both colluding firms and society benefit. C. everyone is eventually a loser. D. only the price leader benefits while other firms and society lose.
- In the long run, an oligopoly firm: a. Will produce the same output as a monopoly. b. Will consistently engage in price wars. c. Will always produce in the range of diseconomies of scale. d. Will produce output on both the elastic and inelastic segmen
- Among the perfect competition, Monopoly, and monopolistic competition, which form of market yields maximum aggregate output and minimum prices?
- A group of firms that agrees to act as a monopoly is called a [{Blank}]. a) Natural monopoly, b) Increasing cost industry, c) Cartel, d) Perfect competition, e) Nationalized industry.
- A monopolist: A. produces more than the competitive outcome. B. produces the same units as the competitive outcome. C. produces less than the competitive outcome. D. has zero profits. E. has the same profits as what would have in a competitive market.
- 37. The existence of economic profits in a competitive market A. Is usually against the law B. Allows firms to create monopolies C. Results in normality D. Will attract competitors E. Increases n
- If the government attempts to break up a natural monopoly to enforce competition in an industry, a. the average cost of producing the good will increase. b. the smallest firm will have a significant cost advantage over the larger, less efficient firms. c.
- If the government attempts to break up a natural monopoly to enforce competition in an industry: a) the average cost of producing the good will increase. b) the smallest firm will have a significant cost advantage over the larger, less efficient firms.
- What do a monopolistic competition, pure monopoly, and perfect competition have in common? a. the rule of profit maximization. b. long-run economic profits. c. free entry. d. differentiated product. e. price taking.
- Monopolistic competition differs from ______. A. monopoly because firms cannot set their own price B. perfect competition because the goods or services produced are differentiated C. monopoly because
- Cartels are most likely to arise in which of the following market structures? A. Perfect competition. B. Monopolistic competition. C. Oligopoly. D. Monopoly.
- An arrangement where there is explicit collusion between competitors to set a common price and adhere to output quotas is referred to as: a. contestable market. b. a perfect competitor. c. a cartel. d. a monopoly.
- Two duopoly firms form a cartel. They decide to collude and fix the price of their good. Each individual firm will earn the highest profit if A) it sticks with the agreement and the other cheats. B)
- Oligopolies are firms that operate in a less competitive market where market concentration is high, meaning only a few firms produce a given commodity and compete in a given market. Since each firm (oligopoly) has a large market share, they will choose a
- Which of the following is not a difference between a monopoly and a competitive firm? a. Monopolies always earn economic profits, whereas competitive firms never do, b. A competitive firm produces at a minimum average total cost in long-run equilibrium,
- A market structure in which two firms control the market is a a. monopoly b. monopolistic competition c. perfect competition d. duopoly A firm that is a price maker can a. limit output and rais
- 1. Do Monopolistically competitive firms generate a long-run profit? 2. Why is a monopolistic competition said to be inefficient?
- Oligopoly differs from monopoly in that: a. in oligopoly, prices tend to be much higher than in a monopoly industry. b. strategic pricing interactions are more likely to occur in an oligopoly industry than in a monopoly industry. c. strategic pricing inte
- A mixed market economy is one in which: a. the government has complete control. b. there are strict limits on economic choice. c. the government makes no regulations. d. there is competition and free enterprise.
- An industry dominated by one firm is: a. A monopoly. b. An oligopoly. c. Monopolistic competition. d. Perfect competition.
- In the dominant firm model of oligopoly, the smaller firms act as if they are A. oligopolists. B. monopolistic competitors. C. perfect competitors. D. monopolists.
- Suppose two firms dominate a market and control price and output. This type of market is called a) duopoly. b) monopoly. c) monopolistically competitive. d) oligopoly.
- When an industry has many firms, the industry is a. an oligopoly if the firms sell differentiated products, but it is monopolistic competitive if the firms sell identical products. b. an oligopoly i
- 1. MC<P at profit maximization. Is this: a. PC=Perfect Competition b. M=Monopoly c. MC=Monopolistic Competitor d. O=Oligopoly 2. Long-Run equilibrium at minimum ATC. Is this: a. PC=Perfect Competitio
- As long as firms currently in a monopolistically competitive market are earning profits: a. more firms will leave the market before the profits are competed away. b. the government will step in and regulate prices to ensure they stay competitive. c. the f
- Given that pure competition and pure monopolies do not exist, to any extent, provide an argument for and against the idea of monopolistically competitive or oligopoly firms. Include examples of these
- If all of the firms in an oligopoly successfully collude and form a cartel, then the total profit for the cartel is equal to what it would be if the market were a monopoly. a. True b. False
- All monopolies exist because of: a. Firms' desire to maximize profits, b. Failure of antitrust laws, c. Barriers to entry, d. Natural selection.
- What market structure allows the good being produced to be either homogeneous or differentiated? a. Monopolistic competition. b. Oligopoly. c. Monopoly d. Perfect competition. e. None of the above.
- In which of the following market models is marginal revenue twice as steep as demand (and below it)? A. Pure monopoly, oligopoly, and monopolistic competition B. Pure monopoly, oligopoly, and pure competition C. Pure monopoly only D. Oligopoly only
- A market structure with so many firms that no one firm has any influence over price, and firms produce an identical product is called: O monopoly O oligopoly O perfect competition O monopolistic competition
- According to the kinked demand curve model, if a firm in an oligopoly raises its prices, competing firms will [{Blank}] their prices, and if a firm in an oligopoly lowers its prices, competing firms will [{Blank}] their prices. a) lower; lower, b) lower;
- Firm interdependency is more likely? a. In oligopoly than the monopolistic competition. b. In monopoly than an oligopoly. c. In pure competition than the monopolistic competition. d. None of the above.
- 1. When comparing oligopoly (when there are only two firms) outcomes to the outcome in a true monopoly industry, a. What are the differences? b. What are the similarities? 2. How does applying game th
- When the industry has many firms, the industry is: a. an oligopoly if the firms sell differentiated products, but it is monopolistically competitive if the firms sell identical products b. an oligopoly if the firms sell differentiated products, but it is
- As the number of sellers in an oligopoly grows larger, an oligopoly looks more like? A. monopoly. B. monopolistic competition. C. a perfectly competitive market. D. a collusion solution.
- In long-run equilibrium, a firm in monopolistic competition earns A. a normal profit. B. an economic profit but the economic profit is less than it would be if the firm was a monopoly. C. an economic profit that is higher than what it would be if the firm
Explore our homework questions and answers library
Browse
by subject