In an oligopolistic market, collusive agreements can be difficult to sustain over the long run. All other things being equal, which combination of factors A, B, C or D is most likely to increase the stability of a collusive cartel?
| Number of firms in the agreement | Similarity of cost structures | Barriers to entry | |
|---|---|---|---|
| A | Many | Low | Low |
| B | Few | High | High |
| C | Few | Low | High |
| D | Many | High | Low |
Many firms, Low similarity of cost structures, Low barriers to entry
Few firms, High similarity of cost structures, High barriers to entry
Few firms, Low similarity of cost structures, High barriers to entry
Many firms, High similarity of cost structures, Low barriers to entry
136 exam-style questions on AQA A Level Economics 1.5 Perfect competition, imperfectly competitive markets and monopoly, covering 1.5.1 Market structures, 1.5.2 The objectives of firms, 1.5.3 Perfect competition, 1.5.4 Monopolistic competition (A-level only), 1.5.5 Oligopoly (A-level only), 1.5.6 Monopoly and monopoly power, 1.5.7 Price discrimination (A-level only), 1.5.8 The dynamics of competition and competitive market processes, 1.5.9 Contestable and non-contestable markets (A-level only), 1.5.10 Market structure, static efficiency, dynamic efficiency and resource allocation (A-level only), and 1.5.11 Consumer and producer surplus (A-level only). Each one has a worked solution and a mark scheme showing where the marks go.