alleryStart learning →Compared with a cartel, the Boeing and Airbus duopoly is held together by:
AA formal written deal
BA government price cap
CAn identical range
DA barrier to entry
Answer & Solution
Correct answer: D. A barrier to entry
1. A duopoly and a cartel are different things even when both involve few firms.
2. A cartel is a group of firms that have a formal agreement to collude.
3. The Boeing and Airbus case is explained differently.
4. The combination of economies of scale and market demand creates the barrier to entry which led to that oligopoly.
5. Structure rather than agreement is what keeps the number of firms small there.
_Source: OpenStax Principles of Microeconomics for AP(R) Courses 2e (CC BY 4.0), Ch 10 'Monopolistic Competition and Oligopoly', sections 10.1-10.2_
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