Q&A Hero

Q: Second-degree price discrimination is the practice of charging A) the reservation price to each customer. B) different prices for different quantity blocks of the same good or service. C) different groups of customers different prices for the same products. D) each customer the maximum price that he or she is willing to pay.

Q: The maximum price that a consumer is willing to pay for each unit bought is the ________ price. A) market B) reservation C) consumer surplus D) auction E) choke

Q: When a firm charges each customer the maximum price that the customer is willing to pay, the firm A) engages in a discrete pricing strategy. B) charges the average reservation price. C) engages in second-degree price discrimination. D) engages in first-degree price discrimination.

Q: An electric power company uses block pricing for electricity sales. Block pricing is an example of A) first-degree price discrimination. B) second-degree price discrimination. C) third-degree price discrimination. D) Block pricing is not a type of price discrimination.

Q: Suppose a firm has market power and faces a downward sloping demand curve for its product, and its marginal cost curve is upward sloping. If the firm reduces its price, then: A) producer surplus increases due to new buyers, but the producer surplus from existing customers declines due to the lower price. B) the change in producer surplus is transferred to consumers. C) the increase in consumer surplus is only due to the increase in quantity demanded. D) the sum of producer and consumer surplus remains the same, but surplus value is transferred from the producer to consumers.

Q: Suppose a firm has market power and faces a downward sloping demand curve for its product, and its marginal cost curve is upward sloping. If the firm reduces its price, then: A) consumer and producer surplus must increase. B) consumer surplus increases, producer surplus may increase or decrease. C) consumer surplus increases, producer surplus must decline. D) consumer and producer surplus must decline.

Q: Rather than charging a single price to all customers, a firm charges a higher price to men and a lower price to women. By engaging in this practice, the firm: A) is trying to reduce its costs and therefore increase its profit. B) is engaging in an illegal activity that is prohibited by the Sherman Antitrust Act. C) is attempting to convert producer surplus into consumer surplus. D) is attempting to convert consumer surplus into producer surplus. E) Both A and C are correct.

Q: Which of the following strategies are used by business firms to capture consumer surplus? A) Price discrimination B) Bundling C) Two-part tariffs D) all of the above

Q: The marginal cost of a monopolist is constant and is $10. The marginal revenue curve is given as follows: MR = 100 - 2Q The profit maximizing price is A) $70. B) $65. C) $60. D) $55. E) $50.

Q: Scenario 10.7: The marginal revenue of green ink pads is given as follows: MR = 2500 - 5Q The marginal cost of green ink pads is 5Q. Refer to Scenario 10.7. Suppose that the firm chooses to produce 200 ink pads. At this level of output the demand for ink pads is A) inelastic. B) unit elastic. C) elastic. D) unit elastic.

Q: Scenario 10.7: The marginal revenue of green ink pads is given as follows: MR = 2500 - 5Q The marginal cost of green ink pads is 5Q. Refer to Scenario 10.7. How many ink pads will be produced to maximize profit? A) 50 B) 250 C) 500 D) 800 E) none of the above

Q: Scenario 10.7: The marginal revenue of green ink pads is given as follows: MR = 2500 - 5Q The marginal cost of green ink pads is 5Q. Refer to Scenario 10.7. How many ink pads will be produced to maximize revenue? A) 0 B) 250 C) 300 D) 500 E) none of the above

Q: After the imposition of a tax of $2 per unit of output, what is the profit maximizing price? A) 11 B) 21 C) 31 D) 41 E) none of the above

Q: Suppose that a tax of $2 per unit of output is imposed on red rubber ball producers. What level of output maximizes profit?A) -1B) 3C) 4.5D) 5E) B, C, and D are correct.

Q: At the profit-maximizing level of output, demand is A) completely inelastic. B) inelastic, but not completely inelastic. C) unit elastic. D) elastic, but not infinitely elastic. E) infinitely elastic.

Q: What is the profit maximizing price? A) 10 B) 20 C) 3 D) 40 E) none of the above

Q: The demand curve and marginal revenue curve for red rubber balls are given as follows:Q = 16 - P MR = 16 - 2QWhat level of output maximizes profit?A) 0B) 4C) 5.5D) 6E) B, C and D all maximize profit.

Q: Scenario 10.6:John is the manufacturer of red rubber balls (Q). He has a red rubber ball manufacturing plant in California, Florida and Montana. The total cost of producing red rubber balls at each of the three plants is given by the following table: California Florida Montana Qc TCc Qf TCf Qm TCm 1 5 1 8 1 4 2 10 2 16 2 8 3 15 3 24 3 12 4 20 4 32 4 16 5 25 5 40 5 20 6 30 6 48 6 24 7 35 7 56 7 28 8 40 8 64 8 32 9 45 9 72 9 3610 50 10 80 10 4011 infinity 11 infinity 11 infinityRefer to Scenario 10.6. If red rubber balls can be produced at any of the three plants, and John decides to produce 1 red rubber ball, at which plant will he produce it?A) CaliforniaB) FloridaC) MontanaD) He is indifferent between California and Florida.E) He is indifferent between Florida and Montana.

Q: Scenario 10.6:John is the manufacturer of red rubber balls (Q). He has a red rubber ball manufacturing plant in California, Florida and Montana. The total cost of producing red rubber balls at each of the three plants is given by the following table: California Florida Montana Qc TCc Qf TCf Qm TCm 1 5 1 8 1 4 2 10 2 16 2 8 3 15 3 24 3 12 4 20 4 32 4 16 5 25 5 40 5 20 6 30 6 48 6 24 7 35 7 56 7 28 8 40 8 64 8 32 9 45 9 72 9 3610 50 10 80 10 4011 infinity 11 infinity 11 infinityRefer to Scenario 10.6. If red rubber balls can be produced at any of the three plants, what is the marginal cost of 5th red rubber ball?A) 4B) 5C) 8D) 20E) none of the above

Q: Scenario 10.5:A firm produces garden hoses in California and in Ohio. The marginal cost of producing garden hoses in the two states and the marginal revenue from producing garden hoses are given in the following table: California Ohio Qc MCc Qo MCo Qc + o MR 1 2 1 3 1 24 2 3 2 4 2 20 3 5 3 6 3 16 4 9 4 8 4 12 5 16 5 12 5 8 6 24 6 17 6 4Refer to Scenario 10.5. How many garden hoses should be produced in California in order to maximize profits?A) 1B) 2C) 3D) 4E) 5

Q: Scenario 10.5:A firm produces garden hoses in California and in Ohio. The marginal cost of producing garden hoses in the two states and the marginal revenue from producing garden hoses are given in the following table: California Ohio Qc MCc Qo MCo Qc + o MR 1 2 1 3 1 24 2 3 2 4 2 20 3 5 3 6 3 16 4 9 4 8 4 12 5 16 5 12 5 8 6 24 6 17 6 4Refer to Scenario 10.5. From the perspective of the firm, what is the marginal cost of the 5th garden hose?A) 4B) 5C) 16D) 12E) 8

Q: A multiplant monopolist can produce her output in either of two plants. Having sold all of her output she discovers that the marginal cost in plant 1 is $30 while the marginal cost in plant 2 is $20. To maximize profits the firm will A) produce more output in plant 1 and less in the plant 2. B) do nothing until it acquires more information on revenues. C) produce less output in plant 1 and more in plant 2. D) produce less in both plants until marginal revenue is zero. E) shut down plant 1 and only produce at plant 2 in the future.

Q: Scenario 10.4: The demand for tickets to the Katy Perry concert (Q) is given as follows: Q = 120,000 - 2,000P The marginal revenue is given as: MR = 60 - .001Q The stadium at which the concert is planned holds 60,000 people. The marginal cost of each additional concert goer is essentially zero up to 60,000 fans, but becomes infinite beyond that point. Refer to Scenario 10.4. Suppose that the municipal stadium authority imposes a tax of $10 per ticket on the concert promoters. Given the information above, the profit maximizing ticket price would A) increase by $10. B) increase by $5. C) not change. D) decrease by $5. E) decrease by $10.

Q: Scenario 10.4: The demand for tickets to the Katy Perry concert (Q) is given as follows: Q = 120,000 - 2,000P The marginal revenue is given as: MR = 60 - .001Q The stadium at which the concert is planned holds 60,000 people. The marginal cost of each additional concert goer is essentially zero up to 60,000 fans, but becomes infinite beyond that point. Refer to Scenario 10.4. Given the information above, what are the profit maximizing number of tickets sold and the price of tickets? A) 0, $60 B) 20,000, $50 C) 40,000, $40 D) 60,000, $30 E) 80,000, $20

Q: Scenario 10.3: The demand curve and marginal revenue curve for red herrings are given as follows: Q = 250 - 5P MR = 50 - 0.4Q Refer to Scenario 10.3. Suppose that a tax of $5 per unit of output is imposed on red herring producers. The price of red herring will A) not change. B) increase by less than $5. C) increase by $5. D) increase by more than $5. E) decrease.

Q: Scenario 10.3: The demand curve and marginal revenue curve for red herrings are given as follows: Q = 250 - 5P MR = 50 - 0.4Q Refer to Scenario 10.3. Compared to a competitive red herring industry, the monopolistic red herring industry A) produces more output at a higher price. B) produces less output at a higher price. C) produces more output at a lower price. D) produces less output at a lower price. E) not enough information to relate the monopolistic red herring industry to a competitive industry.

Q: Scenario 10.3: The demand curve and marginal revenue curve for red herrings are given as follows: Q = 250 - 5P MR = 50 - 0.4Q Refer to Scenario 10.3. At the profit-maximizing level of output, demand is A) completely inelastic. B) inelastic, but not completely inelastic. C) unit elastic. D) elastic, but not infinitely elastic. E) infinitely elastic.

Q: Scenario 10.3: The demand curve and marginal revenue curve for red herrings are given as follows: Q = 250 - 5P MR = 50 - 0.4Q Refer to Scenario 10.3. The marginal cost of red herrings is given as: MC = 0.6Q. What is the profit-maximizing level of output? A) 0 B) 25 C) 50 D) 60 E) 125

Q: Scenario 10.3: The demand curve and marginal revenue curve for red herrings are given as follows: Q = 250 - 5P MR = 50 - 0.4Q Refer to Scenario 10.3. What level of output maximizes revenue? A) 0 B) 45 C) 85 D) 125 E) 245

Q: Scenario 10.2: A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost curve for its product: Q = 200 - 2P MR = 100 - Q TC = 5Q MC = 5 Refer to Scenario 10.2. Suppose that in addition to the tax, a business license is required to stay in business. The license costs $1000. What is the profit maximizing level of output? A) 0 B) 90 C) 95 D) 100 E) none of the above

Q: Scenario 10.2: A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost curve for its product: Q = 200 - 2P MR = 100 - Q TC = 5Q MC = 5 Refer to Scenario 10.2. Suppose that in addition to the tax, a business license is required to stay in business. The license costs $1000. What happens to profit? A) It increases by $1000. B) It decreases by $1000. C) It decreases by less than $1000. D) It stays the same.

Q: Scenario 10.2: A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost curve for its product: Q = 200 - 2P MR = 100 - Q TC = 5Q MC = 5 Refer to Scenario 10.2. Suppose that a tax of $5 for each unit produced is imposed by state government. How much profit does the monopolist earn? A) $4050 B) $4950 C) $450 D) $5

Q: Scenario 10.2: A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost curve for its product: Q = 200 - 2P MR = 100 - Q TC = 5Q MC = 5 Refer to Scenario 10.2. Suppose that a tax of $5 for each unit produced is imposed by state government. What is the profit maximizing price? A) $90.00 B) $10.00 C) $55.00 D) $52.50

Q: Scenario 10.2: A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost curve for its product: Q = 200 - 2P MR = 100 - Q TC = 5Q MC = 5 Refer to Scenario 10.2. Suppose that a tax of $5 for each unit produced is imposed by state government. What is the profit maximizing level of output? A) 0 B) 90 C) 95 D) 100 E) none of the above

Q: Scenario 10.2: A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost curve for its product: Q = 200 - 2P MR = 100 - Q TC = 5Q MC = 5 Refer to Scenario 10.2. How much profit does the monopolist earn? A) $4512.50 B) $4987.50 C) $475.00 D) $5.00

Q: Scenario 10.2: A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost curve for its product: Q = 200 - 2P MR = 100 - Q TC = 5Q MC = 5 Refer to Scenario 10.2. What is the profit maximizing price? A) $95.00 B) $5.00 C) $52.50 D) $10.00

Q: Scenario 10.2: A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost curve for its product: Q = 200 - 2P MR = 100 - Q TC = 5Q MC = 5 Refer to Scenario 10.2. What is the profit maximizing level of output? A) 0 B) 90 C) 95 D) 100 E) none of the above

Q: Scenario 10.2: A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost curve for its product: Q = 200 - 2P MR = 100 - Q TC = 5Q MC = 5 Refer to Scenario 10.2. What level of output maximizes total revenue? A) 0 B) 90 C) 95 D) 100 E) none of the above

Q: Scenario 10.1: Barbara is a producer in a monopoly industry. Her demand curve, total revenue curve, marginal revenue curve and total cost curve are given as follows: Q = 160 - 4P TR = 40Q - 0.25Q2 MR = 40 - 0.5Q TC = 4Q MC = 4 Refer to Scenario 10.1. How much profit will she make? A) -996 B) 0 C) 1,296 D) 1,568 E) none of the above

Q: Scenario 10.1: Barbara is a producer in a monopoly industry. Her demand curve, total revenue curve, marginal revenue curve and total cost curve are given as follows: Q = 160 - 4P TR = 40Q - 0.25Q2 MR = 40 - 0.5Q TC = 4Q MC = 4 Refer to Scenario 10.1. The price of her product will be ________. A) 4 B) 22 C) 32 D) 42 E) 72

Q: Scenario 10.1: Barbara is a producer in a monopoly industry. Her demand curve, total revenue curve, marginal revenue curve and total cost curve are given as follows: Q = 160 - 4P TR = 40Q - 0.25Q2 MR = 40 - 0.5Q TC = 4Q MC = 4 Refer to Scenario 10.1. How much output will Barbara produce? A) 0 B) 22 C) 56 D) 72 E) none of the above

Q: A monopolist has set her level of output to maximize profit. The firm's marginal revenue is $20, and the price elasticity of demand is -2.0. The firm's profit maximizing price is approximately: A) $0 B) $20 C) $40 D) $10 E) This problem cannot be answered without knowing the marginal cost.

Q: A monopolist has determined that at the current level of output the price elasticity of demand is -0.15. Which of the following statements is true? A) The firm should cut output. B) This is typical for a monopolist; output should not be altered. C) The firm should increase output. D) None of the above is necessarily correct.

Q: A monopolist has equated marginal revenue to zero. The firm has: A) maximized profit. B) maximized revenue. C) minimized cost. D) minimized profit.

Q: If a monopolist sets her output such that marginal revenue, marginal cost and average total cost are equal, economic profit must be: A) negative. B) positive. C) zero. D) indeterminate from the given information.

Q: Which of the following is NOT true for monopoly? A) The profit maximizing output is the one at which marginal revenue and marginal cost are equal. B) Average revenue equals price. C) The profit maximizing output is the one at which the difference between total revenue and total cost is largest. D) The monopolist's demand curve is the same as the market demand curve. E) At the profit maximizing output, price equals marginal cost.

Q: Use the following two statements to answer this question: I. For a monopolist, at every output level, average revenue is equal to price. II. For a monopolist, at every output level, marginal revenue is equal to price. A) Both I and II are true. B) I is true, and II is false. C) I is false, and II is true. D) Both I and II are false. E) Statements I and II could either be true or false depending upon demand.

Q: For a monopolist, changes in demand will lead to changes in A) price with no change in output. B) output with no change in price. C) both price and quantity. D) any of the above can be true.

Q: The monopoly supply curve is the A) same as the competitive market supply curve. B) portion of marginal costs curve where marginal costs exceed the minimum value of average variable costs. C) result of market power and production costs. D) none of the above

Q: When a per unit tax is imposed on the sale of a product of a monopolist, the resulting price increase will A) always be less than the tax. B) always be more than the tax. C) always be less than if a similar tax were imposed on firms in a competitive market. D) not always be less than the tax.

Q: The monopolist has no supply curve because A) the quantity supplied at any particular price depends on the monopolist's demand curve. B) the monopolist's marginal cost curve changes considerably over time. C) the relationship between price and quantity depends on both marginal cost and average cost. D) there is a single seller in the market. E) although there is only a single seller at the current price, it is impossible to know how many sellers would be in the market at higher prices.

Q: Suppose that a firm can produce its output at either of two plants. If profits are maximized, which of the following statements is true? A) The marginal cost at the first plant must equal marginal revenue. B) The marginal cost at the second plant must equal marginal revenue. C) The marginal cost at the two plants must be equal. D) all of the above E) none of the above

Q: As the manager of a firm you calculate the marginal revenue is $152 and marginal cost is $200. You should A) expand output. B) do nothing without information about your fixed costs. C) reduce output until marginal revenue equals marginal cost. D) expand output until marginal revenue equals zero. E) reduce output beyond the level where marginal revenue equals zero.

Q: To find the profit maximizing level of output, a firm finds the output level where A) price equals marginal cost. B) marginal revenue and average total cost. C) price equals marginal revenue. D) all of the above E) none of the above

Q: Assume that a profit maximizing monopolist is producing a quantity such that marginal revenue exceeds marginal cost. We can conclude that the A) firm is maximizing profit. B) firm's output is smaller than the profit maximizing quantity. C) firm's output is larger than the profit maximizing quantity. D) firm's output does not maximize profit, but we cannot conclude whether the output is too large or too small.

Q: Compared to the equilibrium price and quantity sold in a competitive market, a monopolist will charge a ________ price and sell a ________ quantity. A) higher; larger B) lower; larger C) higher; smaller D) lower; smaller E) none of these

Q: Which of the following is true at the output level where P=MC? A) The monopolist is maximizing profit. B) The monopolist is not maximizing profit and should increase output. C) The monopolist is not maximizing profit and should decrease output. D) The monopolist is earning a positive profit.

Q: Which of the following is NOT true regarding monopoly? A) Monopoly is the sole producer in the market. B) Monopoly price is determined from the demand curve. C) Monopolist can charge as high a price as it likes. D) Monopoly demand curve is downward sloping.

Q: How much profit will the monopolist whose cost and demand curves are shown below earn at output Q1? A) 0CDQ1 B) 0BEQ1 C) 0AFQ1 D) ACDF E) BCDE

Q: For the monopolist shown below, the profit maximizing level of output is: A) Q1. B) Q2. C) Q3. D) Q4. E) Q5.

Q: When the demand curve is downward sloping, marginal revenue is A) equal to price. B) equal to average revenue. C) less than price. D) more than price.

Q: Figure 10.2Refer to Figure 10.2. At output Qm, and assuming that the monopoly has set her price to maximize profit, the consumer surplus is:A) CDE.B) BDEF.C) ADEG.D) 0DEQm.E) none of the above

Q: Which of the following statements about natural monopolies is true? A) Natural monopolies are only found in the markets for natural resources (like crude oil and coal). B) For natural monopolies, marginal cost is always below average cost. C) For natural monopolies, average cost is always increasing. D) Natural monopolies cannot be regulated.

Q: If a monopolist's profits were taxed away and redistributed to its consumers, A) inefficiency would remain because output would be lower than under competitive conditions. B) inefficiency would remain, but not because output would be lower than under competitive conditions. C) efficiency would be obtained because output would be increased to the competitive level. D) efficiency would be obtained because output would be increased and profits removed.

Q: If the regulatory agency sets a price where AR = AC for a natural monopoly, output will be A) equal to the competitive level. B) equal to the monopoly profit maximizing level. C) greater than the monopoly profit maximizing level and less than the competitive level. D) greater than the competitive level.

Q: Which of the following is true when the government imposes a price ceiling on a monopolist? A) Marginal revenue becomes horizontal. B) Marginal revenue is linear. C) Marginal revenue is kinkedhorizontal and then downward sloping. D) Marginal revenue is kinkeddownward sloping and then horizontal.

Q: Deadweight loss from monopoly power is expressed on a graph as the area between the A) competitive price and the average revenue curve bounded by the quantities produced by the competitive and monopoly markets. B) competitive price line and the marginal cost curve bounded by the quantities produced by competitive and monopoly markets. C) competitive price line and the monopoly price line bounded by zero output and the output chosen by the monopolist. D) average revenue curve and the marginal cost curve bounded by the quantities produced by competitive and monopoly markets.

Q: The monopolist that maximizes profit A) imposes a cost on society because the selling price is above marginal cost. B) imposes a cost on society because the selling price is equal to marginal cost. C) does not impose a cost on society because the selling price is above marginal cost. D) does not impose a cost on society because price is equal to marginal cost.

Q: The regulatory lag: A) always benefits the regulated firm. B) is likely to occur with rate-of-return regulation. C) promotes economic efficiency. D) all of the above

Q: With respect to monopolies, deadweight loss refers to the A) socially unproductive amounts of money spent to obtain or acquire a monopoly. B) net loss in consumer and producer surplus due to a monopolist's pricing strategy/policy. C) lost consumer surplus from monopolistic pricing. D) none of the above

Q: Figure 1 The revenue and cost curves in the diagram above are those of a natural monopoly Refer to Figure 10.1. The minimum feasible price is ________. A) P1 B) P2 C) P3 D) P4 E) none of the above

Q: Figure 1 The revenue and cost curves in the diagram above are those of a natural monopoly Refer to Figure 10.1. Suppose that the government decides to limit monopoly power with price regulation. If the government sets the price at the competitive level, it will set the price at ________. A) P1 B) P2 C) P3 D) P4 E) none of the above

Q: Figure 1 The revenue and cost curves in the diagram above are those of a natural monopoly Refer to Figure 10.1. If the monopolist is not regulated, the price will be set at ________. A) P1 B) P2 C) P3 D) P4 E) none of the above

Q: BioMed Pharmaceutical has held a patent on an important heart medication called Heartex, but the patent will expire in the coming year. After the patent expires, other firms can legally sell the same medication as a generic drug product. What will happens to the demand for Heartex and to the Lerner index for this product as the generic drugs enter the market? A) Demand becomes less elastic, Lerner index increases B) Demand becomes less elastic, Lerner index declines C) Demand becomes more elastic, Lerner index increases D) Demand becomes more elastic, Lerner index declines

Q: Zinc Communications developed a new type of cellular telephone that has a three-dimensional (3-D) screen. The company holds a patent on this technology, so they are the only seller of the 3-D phone when it is introduced. Over time, other companies introduce phones that are similar but not identical (i.e., they do not violate the patent held by Zinc). What happens to the demand for 3-D phones facing Zinc and to the profit-maximizing price for the 3-D phone as these similar products enter the market? A) Demand becomes less elastic, price increases B) Demand becomes less elastic, price declines C) Demand becomes more elastic, price increases D) Demand becomes more elastic, price declines

Q: Suppose there are seven firms in a market where the three largest firms supply 20% of the market-clearing quantity and the other four firms supply 10% of the market-clearing quantity. What is the five-firm concentration ratio (i.e., the share of total sales controlled by the five largest firms in the market)? A) 60% B) 70% C) 80% D) 90%

Q: The cartel of oil-producing nations (OPEC) once controlled about 80% of the world petroleum market, but OPEC's market share has declined to about half of its former level. This outcome is a good example of how firms may have: A) relatively high short-run monopoly power that strengthens in the long run. B) relatively high short-run monopoly power that declines in the long run. C) relatively low short-run monopoly power that strengthens in the long run. D) relatively low short-run monopoly power that declines in the long run.

Q: A manufacturer of digital music players uses a proprietary file format that is not used by the other firms in the market. This action by the firm may be an example of using a ________ to reduce the number of firms in the market and to maintain a relatively inelastic demand for its products. A) natural monopoly B) positive externality C) subsidy D) barrier to entry

Q: Under which of the following scenarios is it most likely that monopoly power will be exhibited by firms? A) When there are few firms in the market and the demand curve faced by each firm is relatively inelastic. B) When there are many firms in the market and the demand curve faced by each firm is relatively inelastic. C) When there are few firms in the market and the demand curve faced by each firm is relatively elastic. D) When there are many firms in the market and the demand curve faced by each firm is relatively elastic.

Q: The firms in a market have decided not to compete with one another and have agreed to limit output and raise price. A) This practice is known as concentrating and is legal in the United States and Canada. B) This practice is known as collusion and is illegal in the United States. C) In this way firms take advantage of economies of scale. D) This is an effective barrier to entry, but is illegal in the United States.