Question

one obstacle to operating as a cartrl is that each member frim in the cartel has...

one obstacle to operating as a cartrl is that each member frim in the cartel has an incentive to deviate from what the rest of the cartel wants to do

true or false and why
Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

True

Cartels are formed in the oligopolistic market structure where the firms are interdependent hence firms collude and based on the market demand decide a fixed price. According to game theory, the cartels are unstable as each party has an incentive to cheat or deviate from the fixed levels as that would lead them to earn higher profits by increasing its output(short-run).In the long run, the deviation might lead to the collapse of the cartel, and the firm will get back to competing hence reducing their profits.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Consider the oil-producing countries of A, B, and C. Each has a marginal cost of zero....
Consider the oil-producing countries of A, B, and C. Each has a marginal cost of zero. World demand is given by Q=1204-p. Suppose the three countries form a cartel, and that none of them has an incentive to deviate from the cartel. By how many units lower is the total output of oil under the cartel relative to the Cournot solution?
Concordance rates show the likelihood that if one member of a pair has a particular trait,...
Concordance rates show the likelihood that if one member of a pair has a particular trait, the other member of the pair also has it. a. True b. False
3. Breakdown of a cartel agreement Consider a town in which only two residents, Jacques and...
3. Breakdown of a cartel agreement Consider a town in which only two residents, Jacques and Kyoko, own wells that produce water safe for drinking. Jacques and Kyoko can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water. Price Quantity Demanded Total Revenue (Dollars per gallon) (Gallons of water) (Dollars) 3.00 0 0 2.75 50 $137.50 2.50 100 $250.00 2.25 150...
your clients are forming a three member LLC each holding a 1/3 interest. One member is...
your clients are forming a three member LLC each holding a 1/3 interest. One member is to serve as manager. In the operating agreement, the only other statutory default provisions to be overridden are: (a) advise your clients not to have the tedious consent provisions since they are no longer required for tax classification purposes. (b) check the provisions of the LLC statute to make sure they can be overridden and then prepare the operating agreement as instructed. (c) obtain...
For this discussion, consider the recent actions by OPEC regarding oil output goals. The cartel has...
For this discussion, consider the recent actions by OPEC regarding oil output goals. The cartel has established output goals to impact price. The cartel met with non-OPEC producers to obtain compliance with output limits to increase oil prices to some specified level. Using game theory, what do you predict for compliance with output levels? Why? Does a dominant strategy exist? Nash equilibrium?
you are an investment analyst at financial services frim. One of your clients has sent you...
you are an investment analyst at financial services frim. One of your clients has sent you a newspaper article on the bad debt held by Amex, one major credit card company. Your client doesn't understand what bad debt expense is . Explain you your clienthow to account for bad debt. Provide an example to your client. You can use the following example and assume that Amex uses the aging method. Consider the following accounts for Amex: In millions 2017 2016...
1. Now suppose country A imposes a tax t on A's production of q_A to curb...
1. Now suppose country A imposes a tax t on A's production of q_A to curb emissions. Country B, however, is not taxed. A's cost function is now c_A(q_A) = 48q_A, while B's cost function is c_B(q_B) = 4q_B. World demand is P = 99 - Q. The amount of greenhouse gas emissions per unit is still 0.5, such that total world emissions are given by 0.5Q. What are total world emissions after country A enacts a carbon tax? 2....
1. Now suppose country A imposes a tax t on A's production of q_A to curb...
1. Now suppose country A imposes a tax t on A's production of q_A to curb emissions. Country B, however, is not taxed. A's cost function is now c_A(q_A) = 46q_A, while B's cost function is c_B(q_B) = 4q_B. World demand is P = 99 - Q. The amount of greenhouse gas emissions per unit is still 0.5, such that total world emissions are given by 0.5Q. What are total world emissions after country A enacts a carbon tax? 2....
you are an investment analyst at financial services frim. One of your clients has sent you...
you are an investment analyst at financial services frim. One of your clients has sent you a newspaper article on the bad debt held by Amex, one major credit card company. Your client doesn't understand what bad debt expense is . Explain you your clienthow to account for bad debt. Provide an example to your client. You can use the following example and assume that Amex uses the aging method. Consider the following accounts for Amex: (in millions) 2017 2016...
Complete the Differential Analysis for your business CAVALRY is planning a party at a local orphanage...
Complete the Differential Analysis for your business CAVALRY is planning a party at a local orphanage and elementary. The project is operating at a loss, should CAVALRY discontinue this project? Sales                            $2,400 COGS                            2,000 Gross Profit                      400 Operating Expenses           500 Loss from Operations   ($100) *The company estimates that 20% of COGS are fixed and 60% of operating expenses are variable. Should the company discontinue this project? Why or Why Not? Complete the Capital Budgeting Analysis for...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT