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Basic Question 8 of 17
When firms act together to set prices, they ______
II. are violating U.S. antitrust laws.
III. are likely to make higher profits.
IV. have incentives to cheat on the agreement.
I. are called a cartel.
II. are violating U.S. antitrust laws.
III. are likely to make higher profits.
IV. have incentives to cheat on the agreement.
User Contributed Comments 6
| User | Comment |
|---|---|
| DannyZhou | If IV is true, why is III true? |
| SuperKnight | I think it is true because "they have incentives" which is true, and not that they actually will cheat. |
| frants54 | It is true because they are likely to make profits if they collude and keep prices high, but they will make even more profit if they cheat on the agreement and sell some of the product at a lower price to consumers with higher elasticities of demand for the product. |
| robertucla | Question not fair for non-US residents |
| sharky7 | @robertucia: common sense, it seems obvious that for USA, the kingdom of liberalism an artificial influence on prices is considered illegal |
| chesschh | Couldnt this be colluding? |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
explain supply and demand relationships under oligopoly, including the optimal price and output for firms as well as pricing strategy
CFA® 2025 Level I Curriculum, Volume 1, Module 1.