Question 1

What is collusion in an oligopoly?

Accepted Answer

When the firms of an oligopoly band together and behave as a monopoly

Answer

When firms compete aggressively with each other

Answer

When firms collaborate on research and development

Answer

When firms reduce prices to attract more customers

Question 2

What do firms do when they collude?

Accepted Answer

Agree to a specified price and quantity of product

Answer

Lower prices to drive competitors out of business

Answer

Engage in aggressive marketing tactics

Answer

Increase production to gain market share

Question 3

Why do firms have an incentive to cheat in a cartel?

Accepted Answer

Because after collusion, their marginal revenue is greater than their marginal cost

Answer

Because they want to avoid government intervention

Answer

Because they want to maintain stable prices

Answer

Because they want to increase production efficiency

Question 4

What happens when an individual firm cheats in a cartel?

Accepted Answer

It leads to the cartel usually falling apart

Answer

It results in the firm being fined by the government

Answer

It forces the other firms to increase production

Answer

It causes the firm to lose market share

Question 5

What is another way competition can be reduced besides cartels?

Accepted Answer

Through government intervention and antitrust laws

Answer

Through increased marketing efforts

Answer

Through technological advancements

Answer

Through international trade agreements

Question 6

What is collusion in an oligopoly?

Accepted Answer

When firms band together and behave as a monopoly

Answer

When firms merge to form a single entity

Answer

When firms collaborate on research projects

Answer

When firms compete aggressively

Question 7

What do firms in a collusion agreement agree on?

Accepted Answer

Specified price and quantity of the product

Answer

Advertising budgets

Answer

Market share percentages

Answer

Employee salaries

Question 8

What happens when firms collude to reduce output?

Accepted Answer

They can charge a higher monopoly price

Answer

They lower prices to attract more customers

Answer

They increase production to maximize profits

Answer

They go out of business

Question 9

What term is used to describe firms that collude in an oligopoly?

Accepted Answer

Cartel

Answer

Syndicate

Answer

Cooperative

Answer

Union

Question 10

Why do individual firms in a collusion agreement have an incentive to cheat?

Accepted Answer

MR > MC after collusion

Answer

MR < MC after collusion

Answer

MC > MR after collusion

Answer

MR = MC after collusion

Question 11

What happens when an individual firm in a collusion agreement cheats by lowering prices?

Accepted Answer

Other partners may lose customers

Answer

The cheating firm will be punished openly

Answer

There will be legal consequences

Answer

Other partners will raise their prices

Question 12

Why do cartels usually fall apart in the end?

Accepted Answer

Incentive to cheat leads to instability

Answer

Market saturation

Answer

Lack of resources

Answer

Government intervention

Question 13

Apart from cartels, how else can competition be reduced?

Accepted Answer

Mergers and antitrust laws

Answer

Price collusion

Answer

Monopoly creation

Answer

Hostile takeovers

Question 14

What do you call it when the firms of an oligopoly band together and behave as a monopoly?

Accepted Answer

Collusion

Answer

Monopoly

Answer

Cartel

Answer

Competition

Question 15

What is the main issue with collusive agreements among firms in an oligopoly?

Accepted Answer

Incentive to cheat

Answer

Increase profits

Answer

Stability

Answer

Decrease production

Question 16

What happens to a firm's marginal revenue (MR) and marginal cost (MC) post-collusion?

Accepted Answer

MR > MC

Answer

MR = MC

Answer

MR < MC

Answer

MR is constant

Question 17

What usually happens to a cartel in the end?

Accepted Answer

Falls apart

Answer

Becomes stronger

Answer

Legalizes

Answer

Expands

Question 18

In addition to cartels, how else can competition be reduced?

Accepted Answer

Mergers and antitrust laws

Answer

Price wars

Answer

Market expansion

Answer

Advertising

Related quizzes

Related quizzes