If firms in an oligopolistic industry successfully collude and form a cartel,what price and output will result?
A) the monopoly price and output
B) the competitive price and output
C) the monopolistically competitive price and output
D) a price higher than the monopoly price and, because there is more than one firm in the industry, more output than the monopoly amount
E) a price lower than the competitive price and, because there are only a few firms in the industry, less output than the competitive amount

Question

Quizplus · Accepted Answer

When firms in an oligopolistic industry collude and form a cartel, they act like a monopoly and jointly determine the price and output levels. This results in a higher price and lower output than in a competitive market, but still less extreme than a pure monopoly. Therefore, the correct choice is A) the monopoly price and output.

If Firms in an Oligopolistic Industry Successfully Collude and Form