If there is a collusive agreement in a duopoly to maximise profit, then the price will
A) be the same as the price set by a monopoly.
B) be the same as the price set by a competitive industry.
C) equal the marginal cost of production.
D) equal the average total cost of production.

Question

Quizplus · Accepted Answer

In a collusive agreement in a duopoly, the firms act together to maximize their joint profits, essentially behaving like a single monopolist. Therefore, the price set under such an agreement would be the same as the price set by a monopoly, which is higher than the marginal cost and can be above the competitive price, aiming to maximize profits.

If There Is a Collusive Agreement in a Duopoly to Maximise