A) The quantity supplied by the two firms goes down and the price goes up.

Correct!

Incorrect!

B)  The quantity supplied by the two firms goes up and the price goes down.

C)  The quantity supplied by the two firms goes up and the price goes up.

D)  The quantity supplied by the two firms goes down and the price goes down.

When oligopoly firms collude to increase profits, what happens to the market equilibrium?

A) Firms often don't have information about the profits they will receive if they act as a monopoly

This quiz is now over. You may close this window.

B) Each firm can raise profits by cooperating only when all other firms are currently competing

Firms in an oligopoly can always increase their profits by colluding and acting as a monopoly. Why does this strategy often fail?

C) All of these answers

D) Each firm can make itself better off by being the first to defect and increase production