Multiple Choice
Cost cutting in international operations can take place because of:
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7. Externalities
Externalities: Social Benefits and Social Costs
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Oligopolists can often benefit from which of the following, which means cooperation with rivals?
A
Collusion
B
Perfect competition
C
Price discrimination
D
Product differentiation
Verified step by step guidance1
Understand the concept of oligopoly: It is a market structure characterized by a few firms whose decisions affect each other.
Recognize that in an oligopoly, firms may find it beneficial to cooperate rather than compete aggressively to increase their joint profits.
Define collusion: It is an agreement among firms to coordinate their actions, such as setting prices or output levels, to maximize collective profits.
Compare collusion with other options: Perfect competition involves many firms with no cooperation; price discrimination is charging different prices to different consumers; product differentiation is making products distinct to gain market power.
Conclude that the cooperation with rivals in an oligopoly that benefits the firms is called collusion.
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