Collusive control over price may permit oligopolists to
A) use new technology, achieve economies of scale, and get government subsidies.
B) achieve economies of scale, reduce costs, and prevent price cheating.
C) increase product demand, increase product supply, and lower cost.
D) reduce uncertainty, increase profits, and possibly limit entry of new firms.

Question

Quizplus · Accepted Answer

Collusive control over price allows oligopolists to reduce uncertainty about their profits by agreeing on a stable price and output level, leading to higher profits for all firms in the industry. Furthermore, the collusion may limit the entry of new firms into the industry, allowing existing firms to maintain their market power and potentially achieve even greater profits. However, collusive behavior may not necessarily lead to achieving economies of scale or reducing costs, and it may also be illegal in some cases.

Collusive Control Over Price May Permit Oligopolists to