QUESTION
a.) Gulp and Chug are the two large producers in the oligopolistic market for left-handed coffee mugs. If they can make an agreement, they will cooperate in: allowing new firms into the market. reducing output, which raises the product price. raising production costs. lowering the product price, which attracts more consumers. b.) However, if Gulp sticks to the agreement, Chug has an incentive to: raise its own prices to take advantage of consumer demand. boost its own production to take advantage of high prices. cut its own production to reduce costs. exit the market.
The following graph shows the market-wide demand for left-handed computer mice. (i) Price Quantity
Suppose that, if the market for left-handed computer mice were perfectly competitive, the equilibrium price and quantity would be at point $A$. If instead the market was characterized by cooperating oligopolies, which point would represent a likely price and quantity? B C D E
Public Answer
