ECONOMICS
TECHNOLOGY
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
collusion/price fixing
|
|
|
unfair trading practices/price gouging
|
|
|
markets/surplus
|
|
|
competition/price differences
|
Detailed explanation-1: -If all oligopolists in a market could agree to raise the price, they could all earn higher profits. Collusion, or the cooperative outcome, could result in monopoly profits. In the USA, explicit collusion is illegal. “Price setting” is outlawed to protect consumers.
Detailed explanation-2: -Price fixing occurs when there are a small number of companies, commonly referred to as an oligopoly, in a particular supply marketplace. This limited number of businesses offer the same product and form an agreement to set the price level.
Detailed explanation-3: -The kinked-demand curve explains why firms in an oligopoly resist changes to price. If one of them raises the price, then it will lose market share to the others. If it lowers its price, then the other firms will match the lower price, causing all the firms to earn less profit.
Detailed explanation-4: -The actions of one oligopolist affect others in the same industry because oligopolists are so large that they have the ability to cause a change in output, sales, and prices in the industry as a whole.