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Chapter 1: Q.13 (page 9)

What stops oligopolists from acting together as

a monopolist and earning the highest possible level of profits?

Short Answer

Expert verified

Output prevents them from operating as a monopolist and reaping the greatest revenues possible.

Step by step solution

01

Step 1. To determine

The factors that prevent oligopolists from behaving as a monopoly and reaping the greatest profits possible.

02

Step 2. Explanation

Maximum profits can be earned by monopolists if they form a cartel and behave like a monopolist by reducing their output and increasing prices. But they cannot do so as this practice is illegal. Increasing price beyond a certain level disrupts market and creates unhealthy competition.

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