With successful collusion that maximizes the total profits of the firms in the market,
A)the market demand curve shifts leftward
B)monopoly power allows the sellers to charge whatever price they want for their joint output level
C)each firm faces a horizontal demand curve for its output
D)each firm can sell as much output as it chooses at the price set by the cartel
E)the pricing decision is constrained by the market demand curve

Question

Quizplus · Accepted Answer

In successful collusion, firms act like a monopoly, maximizing joint profits. However, they are still constrained by the market demand curve, which determines the highest price they can charge for their output without losing customers.

With Successful Collusion That Maximizes the Total Profits of the Firms