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.
Correct Answer:
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A)monopsony.
B)cartel.
C)monopoly.
D)duopoly.
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