Collusive Oligopoly: When firms co-operate with each other by a formal agreement or by an informal manner for their benefit, it is known as a collusive oligopoly. In this kind of market, firms avoid competition.

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Answer 1

Question

Chapter 14, Problem 1BCQ

To determine

Concept Introduction:

Collusive Oligopoly: When firms co-operate with each other by a formal agreement or by an informal manner for their benefit, it is known as a collusive oligopoly. In this kind of market, firms avoid competition.

Expert Solution & Answer

Explanation of Solution

Increased oil prices will eventually be imposed on customers. As the price of air-tickets rise, this rise in price can shift the passengers demand to some other alternative.

Passengers will always choose to travel in airlines, which have low prices, if Virgin Airlines and British Airlines decide to collude, then together they can increase their total profit, which was earned by an increase in ticket prices, due to an increase in oil prices.

Collusion will also help both the competitors to stay away from illegal practices and from various criminal acts.

However, it may be the choice of both the airlines whether to collude or not.

Collusion can be objected by the market as their collusion can reduce passengers who travel from airlines other than Virgin Airlines and British Airlines.

Conclusion:

Thus, the market might not be conducive to collusion.

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Consider the table below, which has data on insurance status and medical expenditures for different types of professors at Hypothetical University (HU), economics & criminology professors. Assume that there are an equal number of economics and criminology professors. Assume further that econ professors all have the same level of health and criminology professors all have the same level of health. There is evidence of 2021 Insured? Avg. Expenditures Insured? Avg. Expenditures 2020 Economics Professors Criminology Professors Yes. Yes $25,000 $15,000 0000 ??? ??? $28,000 $10,000 I. moral hazard because in 2021 criminology professors dropped their coverage and health expenditures went down. II. adverse selection because in response to rising premiums after 2020, the professors with lower health expenditure dropped coverage Both I and II neither I nor II

Answer 2

Question

Chapter 14, Problem 1BCQ

To determine

Concept Introduction:

Collusive Oligopoly: When firms co-operate with each other by a formal agreement or by an informal manner for their benefit, it is known as a collusive oligopoly. In this kind of market, firms avoid competition.

Expert Solution & Answer

Explanation of Solution

Increased oil prices will eventually be imposed on customers. As the price of air-tickets rise, this rise in price can shift the passengers demand to some other alternative.

Passengers will always choose to travel in airlines, which have low prices, if Virgin Airlines and British Airlines decide to collude, then together they can increase their total profit, which was earned by an increase in ticket prices, due to an increase in oil prices.

Collusion will also help both the competitors to stay away from illegal practices and from various criminal acts.

However, it may be the choice of both the airlines whether to collude or not.

Collusion can be objected by the market as their collusion can reduce passengers who travel from airlines other than Virgin Airlines and British Airlines.

Conclusion:

Thus, the market might not be conducive to collusion.

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Answer 3

Question

Chapter 14, Problem 1BCQ

To determine

Concept Introduction:

Collusive Oligopoly: When firms co-operate with each other by a formal agreement or by an informal manner for their benefit, it is known as a collusive oligopoly. In this kind of market, firms avoid competition.

Expert Solution & Answer

Explanation of Solution

Increased oil prices will eventually be imposed on customers. As the price of air-tickets rise, this rise in price can shift the passengers demand to some other alternative.

Passengers will always choose to travel in airlines, which have low prices, if Virgin Airlines and British Airlines decide to collude, then together they can increase their total profit, which was earned by an increase in ticket prices, due to an increase in oil prices.

Collusion will also help both the competitors to stay away from illegal practices and from various criminal acts.

However, it may be the choice of both the airlines whether to collude or not.

Collusion can be objected by the market as their collusion can reduce passengers who travel from airlines other than Virgin Airlines and British Airlines.

Conclusion:

Thus, the market might not be conducive to collusion.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 14, Problem 1BCQ

To determine

Concept Introduction:

Collusive Oligopoly: When firms co-operate with each other by a formal agreement or by an informal manner for their benefit, it is known as a collusive oligopoly. In this kind of market, firms avoid competition.

Expert Solution & Answer

Explanation of Solution

Increased oil prices will eventually be imposed on customers. As the price of air-tickets rise, this rise in price can shift the passengers demand to some other alternative.

Passengers will always choose to travel in airlines, which have low prices, if Virgin Airlines and British Airlines decide to collude, then together they can increase their total profit, which was earned by an increase in ticket prices, due to an increase in oil prices.

Collusion will also help both the competitors to stay away from illegal practices and from various criminal acts.

However, it may be the choice of both the airlines whether to collude or not.

Collusion can be objected by the market as their collusion can reduce passengers who travel from airlines other than Virgin Airlines and British Airlines.

Conclusion:

Thus, the market might not be conducive to collusion.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 14, Problem 1BCQ

To determine

Concept Introduction:

Collusive Oligopoly: When firms co-operate with each other by a formal agreement or by an informal manner for their benefit, it is known as a collusive oligopoly. In this kind of market, firms avoid competition.

Expert Solution & Answer

Explanation of Solution

Increased oil prices will eventually be imposed on customers. As the price of air-tickets rise, this rise in price can shift the passengers demand to some other alternative.

Passengers will always choose to travel in airlines, which have low prices, if Virgin Airlines and British Airlines decide to collude, then together they can increase their total profit, which was earned by an increase in ticket prices, due to an increase in oil prices.

Collusion will also help both the competitors to stay away from illegal practices and from various criminal acts.

However, it may be the choice of both the airlines whether to collude or not.

Collusion can be objected by the market as their collusion can reduce passengers who travel from airlines other than Virgin Airlines and British Airlines.

Conclusion:

Thus, the market might not be conducive to collusion.

Answer 6

Chapter 14, Problem 1BCQ

To determine

Concept Introduction:

Collusive Oligopoly: When firms co-operate with each other by a formal agreement or by an informal manner for their benefit, it is known as a collusive oligopoly. In this kind of market, firms avoid competition.

Expert Solution & Answer

Explanation of Solution

Increased oil prices will eventually be imposed on customers. As the price of air-tickets rise, this rise in price can shift the passengers demand to some other alternative.

Passengers will always choose to travel in airlines, which have low prices, if Virgin Airlines and British Airlines decide to collude, then together they can increase their total profit, which was earned by an increase in ticket prices, due to an increase in oil prices.

Collusion will also help both the competitors to stay away from illegal practices and from various criminal acts.

However, it may be the choice of both the airlines whether to collude or not.

Collusion can be objected by the market as their collusion can reduce passengers who travel from airlines other than Virgin Airlines and British Airlines.

Conclusion:

Thus, the market might not be conducive to collusion.

Answer 7

Chapter 14, Problem 1BCQ

To determine

Concept Introduction:

Collusive Oligopoly: When firms co-operate with each other by a formal agreement or by an informal manner for their benefit, it is known as a collusive oligopoly. In this kind of market, firms avoid competition.

Answer 8

Expert Solution & Answer

Explanation of Solution

Increased oil prices will eventually be imposed on customers. As the price of air-tickets rise, this rise in price can shift the passengers demand to some other alternative.

Passengers will always choose to travel in airlines, which have low prices, if Virgin Airlines and British Airlines decide to collude, then together they can increase their total profit, which was earned by an increase in ticket prices, due to an increase in oil prices.

Collusion will also help both the competitors to stay away from illegal practices and from various criminal acts.

However, it may be the choice of both the airlines whether to collude or not.

Collusion can be objected by the market as their collusion can reduce passengers who travel from airlines other than Virgin Airlines and British Airlines.

Conclusion:

Thus, the market might not be conducive to collusion.