Question

In: Economics

Suppose that the four largest maple syrup manufacturers in a country decide to collude and set...

Suppose that the four largest maple syrup manufacturers in a country decide to collude and set prices in the market. Based on demand conditions every? year, they decide the quantity of maple syrup that will be supplied to maintain a certain market price.

This is an example of a _____(Bertrand oligopoly/Cournot oligopoly)

This cartel would succeed if? ___________.

A.

firms value profits more today than in the future.

B.

detection of cheaters is difficult.

C.

the market has substantial long?term value.

D.

it is hard to punish cheaters.

Are firms more likely to cheat if the cartel decided to fix prices only once as opposed to fixing prices every? year?

A.

?No, because there is no threat of new firms entering.

B.

?No, because the market is less profitable.

C.

?Yes, because future punishment for cheating? isn't possible.

D.

?Yes, because future periods have more value

2. For a market to be characterized as monopolistically competitive?, there must be? __________.

A.

zero economic profits in the long run.

B.

many sellers.

C.

differentiated products.

D.

all of the above.

An example of a monopolistically competitive firm

is the? __________.

A.

patented drug market.

B.

fast dash food industry

C.

local water company.

D.

wheat market.

Expert Solution

Suppose that the four largest maple syrup manufacturers in a country decide to collude and set prices in the market. Based on demand conditions every? year, they decide the quantity of maple syrup that will be supplied to maintain a certain market price.This is an example of a Cournot oligopoly because the firms choose the level of quantities.

This cartel would succeed if the market has substantial long?term value because only then no frim will have the incentive to deviate.

Are firms more likely to cheat if the cartel decided to fix prices only once as opposed to fixing prices every? year?- ?Yes, because future punishment for cheating? isn't possible.

For a market to be characterized as monopolistically competitive?, there must be all the above zero economic profits in the long run, many sellers. differentiated products.

An example of a monopolistically competitive firm is the fast dash food industry

Rahul Sunny answered 1 year ago

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