If there is a collusive agreement in a duopoly to maximize profit, then the price will
A) equal the marginal cost of production.
B) equal the average total cost of production.
C) be the same as the price set by a monopoly.
D) be the same as the price set by a competitive industry.

Question

Quizplus · Accepted Answer

In a collusive agreement, firms in a duopoly act like a monopoly to maximize joint profits, setting a price similar to what a monopoly would set, which is above marginal cost and average total cost.

If There Is a Collusive Agreement in a Duopoly to Maximize