Question

You learned in this unit that oligopolies such as TVA, OPEC, and producers of milk collude and form cartels. Write a short paragraph

explaining:

How this affects consumers

What could occur if collusion and cartels were to form in the prescription drug industry

The role government plays if collusion and cartels form in the United States.

Answer 1

The way that oligopolies forming cartels and colluding affects consumers is that prices for goods and services will be higher.

If there was collusion in the prescription drug industry, the prices of medicine would rise.

The government's role in a situation where there is collusion is to stop it from continuing.

What is the effect of collusion by oligopolies?

When oligopolies collude, they are able to set the price for the good or service that they sell because they would control the market. This would allow them to set higher prices to make more profit.

If this happens in the prescription drug industry, medicine prices would go up much like what Martin Shkrli attempted in with Daraprim.

What is the government's role?

The U.S. is a free market nation which means that it frowns on cartels and collusion. The U.S. government would therefore act against collusion by stopping it and prosecuting those involved.

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