Tendency for oligopolists to cheat on collusive agreements

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Reference no: EM131392740

1. There is strong tendency for oligopolists to cheat on collusive agreements because:

a. effective collusion rarely benefits any individual firm.

b. a cheater can benefit both when all the other parties abide by the agreement and when other parties also cheat.

c. when all firms abide by the agreement, the aggregate profits are reduced.

d. collusion is a form of marginal cost pricing, whereas most firms benefit when price is above marginal cost.

e. cheating is generally at the expense of the buyer and not the colluding sellers.

2. When there is demand-pull inflation, people's total spending in the economy will be falling.

a. True

b. False

Reference no: EM131392740

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