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Suppose Market Demand for Bottled Water in the U

Question 28

Multiple Choice

Suppose market demand for bottled water in the U.S.is low enough that one firm could supply all of the demand.Two firms enter the market and agree to charge a price above the marginal cost of production.We can expect that:


A) they will make a considerably large profit.
B) they will work better than a cartel.
C) this agreement will collapse.
D) if one firm does not honor the agreement the other firm will sue for breach of contract.

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