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Fact 15.1.1 An Energy Drink with a Monster of a Stock
The $5.7 billion energy-drink category, in which Monster holds the No. 2 position behind industry leader Red Bull, has slowed down as copycat brands jostle for shelf space. Over the past five years Red Bull's market share in dollar terms has gone from 91 percent to well under 50 percent and much of that loss has been Monster's gain.
-Refer to Fact 15.1.1. If Monster and Red Bull successfully formed a cartel, the priced charged for energy drinks would ________ and economic profit would ________.
A)rise; increase
B)rise; decrease
C)fall; increase
D)fall; decrease
E)remain unchanged; remain unchanged

Question

Quizplus · Accepted Answer

If Monster and Red Bull formed a cartel, they would likely reduce competition and increase prices to maximize joint profits, leading to an increase in economic profit.

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