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Question
An agreement between Nike and Adidas to raise prices of the track shoes that each company produces by 50 percent is an example of a collusive agreement, and economists generally agree that
a. this agreement is in the best interest of society because the price of track shoes is significantly above marginal cost.
b. this agreement is in the best interest of society because the quantity of track shoes bought and sold is significantly less than the quantity that would be bought and sold in a perfectly competitive market.
c. this agreement is not in the best interest of society because the price of track shoes is significantly below marginal cost.
d. this agreement is not in the best interest of society because the price of track shoes is significantly above marginal cost.
e. the price of track shoes does not affect societal welfare.
Answer
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