Question : 81) The cartelization of an industry with a homogeneous product : 1384242

81) The cartelization of an industry with a homogeneous product usually means that

A) member firms have agreed to cooperate in reducing costs.

B) member firms have agreed to reduce their joint output.

C) the demand curve facing the industry must be linear.

D) the demand curve facing the industry must be elastic.

E) member firms have agreed to reduce investment.

82) One of the reasons cartels are considered unstable is that

A) member firms reduce their investment, thereby becoming uncompetitive over time.

B) it is inefficient to manage individual firms collectively.

C) there are wide fluctuations in price as cartel members vary their output.

D) consumers seek out substitutes to the cartel product.

E) individual members of the cartel have an incentive to violate the cartel agreement.

83) The two characteristic problems for cartels are

A) agreeing on the price to be set and preventing new entrants.

B) policing members’ output restrictions and preventing new entrants.

C) coordinating marketing policies and policing members’ quotas.

D) agreeing on the price to be set and coordinating marketing policies.

E) policing members’ prices and restricting output.

84) It is common for a cartel to collapse when one or more firms in the cartel

A) exceed its output quota.

B) produce more efficiently than other member firms.

C) is much larger than other cartel members.

D) increase its price above the monopoly price.

E) exit the industry.

85) A cartel can only succeed in the long run

A) with authorization from the government.

B) if there is free entry of new firms.

C) if all firms are experiencing decreasing returns to scale.

D) if the long-run market supply curve is elastic.

E) if member firms cooperate and resist their individual incentives.

86) Suppose all of the firms in a perfectly competitive industry form a cartel and agree to restrict output, thereby raising the price of the product. Individual Firm A will gain the most from the existence of the cartel if

A) all firms, including A, cooperate and restrict output.

B) Firm A restricts output, while the other firms do not.

C) all firms, except Firm A, cooperate and restrict output.

D) no firms restrict output.

E) all firms revert back to their competitive outputs.

87) In November 2012, there was some discussion of several south-Asian countries joining together to restrict the supply of rice to the world market. Between them, these countries’ exports of rice account for 40% of the total global trade. What would they be trying to accomplish?

A) They are attempting to form a cartel, increase their joint output, and control a larger percentage of the total global trade.

B) They are attempting to price discriminate between consumers of their exported rice, thereby increasing their share of the global trade and increasing their joint profits.

C) They are attempting to form a cartel, jointly restrict output, and increase the world price of rice.

D) They are attempting to act as a bloc to restrict entry of new producers to the world market, and thereby protect their joint profits.

E) They are attempting to form a cartel, drive other producers out of the world market and then increase their output of rice.

88) Refer to Figure 10-4. In order to maximize its profits, a perfect-price-discriminating monopolist produces the quantity

A) Q0.

B) Q1.

C) Q2.

D) Q3.

E) Q4.

89) Refer to Figure 10-4. If the monopolist is practicing perfect price discrimination and is maximizing its profits, the total revenue is represented by the area

A) 0P4aQ0.

B) 0P5cQ2.

C) 0P1dQ1.

D) 0P2bQ0.

E) 0P3cQ2.

90) Refer to Figure 10-4. If the monopolist is practicing perfect price discrimination and is maximizing its profits, the consumer surplus is represented by the area

A) P5P3c.

B) P5P4a.

C) P5P0c.

D) P5P2e.

E) There is no consumer surplus in this case.