In markets characterized by oligopoly, A. collective profits are always lower with cartel arrangements than they are without cartel arrangements. B. pursuit of self-interest by profit-maximizing firms always maximizes collective profits in the market. C. the oligopolists earn the highest profit when they cooperate and behave like a monopolist. D. collusive agreements will always prevail.

Answer: the oligopolists earn the highest profit by cooperating and behaving like a monopolist.

Explanation:

Oligopoly is a market structure where there are few number of firms and, none of the firms can prevent the others from having an influence. Oligopolies can be as a result of various kinds of collusion which has reduced competition and led to higher prices for the consumers.

With few sellers, oligopolists are usually aware of the deeds of the others. An oligopoly maximizes profit as they are price setters and barriers to entry are very high. The barriers to entry include patents, economies of scale, access to expensive technology, government licenses, and strategic actions by the firms designed to prevent new firms.

Oligopolies can therefore retain long run abnormal profits like a monopolist as the high barriers prevent firms from entering market to capture the excess profits.

C. the oligopolists earn the highest profit when they cooperate and behave like a monopolist.

Explanation:

In markets characterized by oligopoly, the oligopolists earn the highest profit when they cooperate and behave like a monopolist.

The reason is that generally, oligopolists are interdependent. That means that they are affected by the actions of each other. If any were to increase output or price, it will affect the other players in the market so they are better off when they cooperate with each other and behave like a monopolist.