If oligopolists engage in collusion and successfully from a cartel, the market outcome is ?
Correct answer: C. the same as if it were served by a monopoly.
- A. the same as if it were served by competitive firms.
- B. efficient because cooperation improves efficiency
- C. the same as if it were served by a monopoly.
- D. known as a Nash equilibrium
Explanation
A successful cartel coordinates firms to restrict total output and charge the joint-profit-maximising price. This reproduces the outcome of a monopoly rather than a competitive market.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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