ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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more is produced
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profit decreases
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prices are higher
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more firms enter the market
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Detailed explanation-1: -Answer and Explanation: The market structure where collusion can happen is an oligopoly market structure. In the oligopoly market, the products are slightly differentiated products or very close substitute products.
Detailed explanation-2: -The correct answer is a. The results of market competition are: Lower costs of production and lower prices.
Detailed explanation-3: -Price collusion might occur in oligopolistic industries in order to maximize profits and for firms to better compete. For example, in the tobacco industry the competing firms might collude with each other to set quantities and prices instead of engaging in regular competition or price wars.
Detailed explanation-4: -Firms are interdependent. Product differentiation. High barriers to entry. Uncertainty.