New Enroll in RBI Grade B New Batch - Starts on May 21

    Question

    Which of the following is not correct with regard to

    oligopoly?
    A In an oligopolistic market, the cartel is non-cooperative. Correct Answer Incorrect Answer
    B Under Cournot model of oligopoly, firms choose quantities simultaneously and independently, and industry output determines price through demand Correct Answer Incorrect Answer
    C The cartel price is determined by market demand curve at the level of output chosen by the cartel Correct Answer Incorrect Answer
    D A cartel will choose to produce less output and charge a higher price than would be found in a perfectly competitive market Correct Answer Incorrect Answer
    E The cartel's profit‐maximizing decision is the same as that of a monopolist Correct Answer Incorrect Answer

    Solution

    In oligopoly, the cartel is usually cooperative. Because if the cartel members do not cooperate and cheat, the there would be no incentive to remain in the cartel, because i f all members cheated, the cartel would cease to earn monopoly profits.

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