Question

With regards to social welfare, oligopolists forming a cooperative alliance is : Group of answer choices bad because because prices are too high and output is too low bad because output is too high and prices are too high good because it leads to less disagreement and lower prices and more variety good because forming a cooperative alliance closely resembles a perfectly competitive outcome

Answer 1

Answer:

With regards to social welfare, oligopolists forming a cooperative alliance is bad because because prices are too high and output is too low.

Explanation:

Oligopoly is a market structure with a small number of firms controlled by few producers thereby reducing competition.

The firms that come together to form an oligopolistic alliance need to see the benefits of collaboration over costs of economic competition, then agree to not compete and instead agree on the benefits of co-operation.

With regards to social welfare, oligopolists forming a cooperative alliance is , either explicitly or tacitly, to restrict output and/or fix prices, in order to achieve above normal market returns thereby increasing the prices of commodity.