When it comes to posted offer markets, which of the following statements is not likely to be true?
A) Price signalling and tacit collusion is easier when there are fewer as opposed to more sellers in the market.
B) Demand withholding of buyers is greater when there are fewer as opposed to more buyers in the market.
C) Prices will converge smoothly to the equilibrium price as long as the magnitudes of the consumer and producer surplus are approximately equal.
D) Prices will tend to be higher than the market equilibrium price due to tacit collusion and signalling on the part of the sellers.

Question

Quizplus · Accepted Answer

Statement C is not likely to be true because the convergence of prices to the equilibrium price is primarily determined by the forces of supply and demand, rather than the equality of consumer and producer surplus.

When It Comes to Posted Offer Markets, Which of the Following