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Figure: Monopoly Profits in Duopoly
-(Figure: Monopoly Profits in Duopoly)Use Figure: Monopoly Profits in Duopoly.If there were two firms in this industry,they could engage in _____ and reap monopoly profits.
A) game theory
B) the prisoners' dilemma
C) collusive behaviour
D) measuring the four-firm concentration ratio

Question

Use the following to answer questions :
Figure: Monopoly Profits in Duopoly 
-(Figure: Monopoly Profits in Duopoly)Use Figure: Monopoly Profits in Duopoly.If there were two firms in this industry,they could engage in _____ and reap monopoly profits.
A) game theory 
B) the prisoners' dilemma 
C) collusive behaviour 
D) measuring the four-firm concentration ratio

Quizplus · Accepted Answer

The graph shows that when there are two firms in the industry, they can engage in collusive behavior which results in monopoly profits. This means that the firms work together to limit output and raise prices, similar to how a monopoly would operate. Game theory and the prisoners' dilemma are concepts that help explain the behavior of firms in such situations, but they do not directly answer the question. Measuring the four-firm concentration ratio is a way to analyze market structure, but it does not relate to the behavior of the firms in this scenario.

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