Suppose that Bieber and Rihanna are duopolists in the music industry. In May, they agree to work together as a monopolist, charging the monopoly price for their music and producing the monopoly quantity of songs. By June, each singer is considering breaking the agreement. What would you expect to happen next?

Respuesta :

Answer:

I would expect prices to fall and music production to increase.

Explanation:

Duopoly is a market structure in which there are only two producers. Monopoly, in turn, is a structure in which there is only one producer. In that case, Bieber and Rihana made a cartel, collusion to dominate the market as a monopolist, as a monopolist they can charge a higher price, and produce a smaller amount. By undoing the cartel, both will again compete in price and quantity, so prices tend to fall and the amount of music produced increases.