QuestionDecember 15, 2025

True or False: Based on the fact that both Velvet Brew and Crimson Bean increased production from the initial cartel quantity, you know that the output effect was larger than the price effect at that quantity. True False

True or False: Based on the fact that both Velvet Brew and Crimson Bean increased production from the initial cartel quantity, you know that the output effect was larger than the price effect at that quantity. True False
True or False: Based on the fact that both Velvet Brew and Crimson Bean increased production from the initial cartel quantity, you know that the
output effect was larger than the price effect at that quantity.
True
False

Solution
4.2(226 votes)

Answer

True Explanation 1. Interpret the scenario If both firms increased output beyond cartel quantity, marginal revenue from extra units exceeded marginal cost lost from lower price. 2. Compare output and price effects Output effect dominates if producing more is profitable; thus, output effect > price effect at that point.

Explanation

1. Interpret the scenario<br /> If both firms increased output beyond cartel quantity, marginal revenue from extra units exceeded marginal cost lost from lower price.<br />2. Compare output and price effects<br /> Output effect dominates if producing more is profitable; thus, output effect > price effect at that point.
Click to rate:

Similar Questions