Microeconomics ch.14 Oligopoly

Refer to the diagram, where the numerical data show profits in millions of dollars. Beta's profits are shown in the northeast corner and Alpha's profits in the southwest corner of each cell. If Alpha and Beta agree to a high-price policy through collusion, the temptation to cheat on that agreement is demonstrated by the fact that

Beta can increase its profit by lowering its price.

In the United States cartels are

in violation of the antitrust laws.

Oligopolistic firms engage in collusion to

earn greater profits.

Price leadership represents a situation where oligopolistic firms

tacitly collude.

The term oligopoly indicates

a few firms producing either a differentiated or a homogeneous product.

Which of the following industries is an illustration of homogeneous oligopoly?

aluminum

Collusion among oligopolistic firms

becomes more difficult if the firms all have different cost and demand curves.

The kinked-demand curve of an oligopolist is based on the assumption that

competitors will follow a price cut but ignore a price increase.

The diagram portrays:

non-collusive oligopoly.

The kinked-demand curve model of oligopoly is useful in explaining

why oligopolistic prices might change infrequently.