A colluding oligopoly will face inelastic market demand and produce up to the point at which marginal revenue equals marginal cost and will set price equal to marginal cost.

Question

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A colluding oligopoly will typically set prices above marginal cost to maximize joint profits, not equal to marginal cost, and will produce where marginal revenue equals marginal cost.

A Colluding Oligopoly Will Face Inelastic Market Demand and Produce