Posted by **Linda** on Monday, June 22, 2009 at 12:20am.

Which one is the best answer

1.Agreeing to be part of a price-fixing cartel is:

a.unlikely to yield maximum prices or profits for very long time

b.difficult to maintain, but almost guaranteed to ensure maximum profit

c.illegal in most countries

d.a and b

e.a and c

2.In a duopoly situation with two firms A and B, A's best-response curve:

a. gives A's profit-maximizing price given B's anticipated price.

b. gives A's minimax solution.

c. is derived based on the underlying interdependance of A and B.

d. both a and c.

e. all of the above.

- Managerial Economics -
**economyst**, Monday, June 22, 2009 at 8:42am
Hummm. tough questions.

Price fixing cartels are, initially designed to deliver maximum profits. However, they are difficult to maintain; too much incentives to cheat. So b is true. Since they are difficult to maintain, they are unlikely to yield maximum profits for a very long time. Take out "prices" from a and a is true. Finally they are illegal in most non-third-world countries. So c is true.

2) I think a

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