Assume that firms in an oligopoly are currently colluding to set price and output to maximise total industry profit. If the oligopolists are forced to stop colluding, the price charged by the oligopolists will _________ and the total output produced will __________?

Related Mcqs:

1. A firm in perfectly competitive industry is producing 50 units, its profit-maximising quantity. Industry price is £2 and total fixed costs and total variable cost are £25 and £40 respectively. The firm’s economic profit is ?

   A. £35
   B. £15
   C. £30
   D. £60

2. A situation in which oligopolists interacting with one another each choose their best strategy given the strategies that all the other oligopolists have chosen is known as a ?

   A. Nash equilibrium
   B. dominant strategy.
   C. cartel
   D. collusion solution

3. Assume That the firms operate as purely competitive sellers (a purely competitive industry) In the long run, equilibrium price equals _________ quantity equals _________ and profits total _________?

   A. $100, 2 million barrels per day $60 million
   B. $80, 4 million barrels per day $70 million
   C. $60, 6 million barrels per day, $20 million
   D. $40, 8 million barrels per day, $0 million

4. If the marginal revenue is less than the marginal cost then to profit maximise a firm should ?

   A. Reduce output
   B. Increase output
   C. Leave output where it is:
   D. Increase costs

5. An oligopoly with a dominant price leader will produce a level of output ?

   A. equal to what a monopolist would choose in the same industry
   B. between that which would prevail under competition and that which a monopolist would choose in the same industry
   C. that would prevail under competition
   D. between that which would prevail under competition and that which a monopolistic competitor would choose in the same industry.

6. Suppose that the firms collude and become a cartel The best level of output for the cartel as a whole is ___________ the price equals __________ and profits total __________?

   A. 2 million barrels per day, $100, $60 million
   B. 4 million barrels per day, $80, $160 million
   C. 6 million barrels per day, $60, $60 million
   D. 8 million barrels per day, $40, $20 million

7. To maximise growth without making a loss a firm should produce the highest output where ?

   A. Average revenue equals marginal cost
   B. Average revenue equals average cost
   C. Marginal revenue equals marginal cost
   D. Average cost equals marginal cost

8. In monopolistic competition of firms are making abnormal profit other firms will enter and ?

   A. The marginal cost will shift outwards
   B. the demand curve will shift inwards
   C. The average cost will shift downwards
   D. The average variable cost will increase

9. Firms in oligopoly are likely to ?

   A. Invest heavily in branding
   B. Act independently of other firms
   C. Try to differentiate its products
   D. Try to be a price maker

10. Assume that global recession causes the quantity of tin demanded to decrease by 4 million pounds at each price To maintain the price of tin at the target price you would ?

    A. sell 4 million pounds of tin
    B. sell 8 million pounds of tin
    C. buy 4 million pounds of tin
    D. buy 8 million pounds of tin