The Incentive to Cheat Is Strong in a Cartel Because

question 157

Multiple Choice

The incentive to cheat is strong in a cartel because

• A) each firm can increase its output and thus its profit by cutting price.
• B) the marginal revenue is less than marginal cost at the profit-maximizing price set by the cartel.
• C) there is a significant lack of government regulation of cartels,especially those in worldwide production.
• D) the costs of production are the same for each firm,but the product demand differs.
• E) each firm could be bought out by other firms.

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Definitions:

British Controls

British controls refer to regulatory, administrative, or policy measures implemented by the British government to manage its territories and colonies.

European Enlightenment

A cultural and intellectual movement in Europe during the 17th and 18th centuries, emphasizing reason, individualism, and skepticism towards traditional authority.

American Independence

The state of being free and independent, which for the United States was achieved from British rule and declared on July 4, 1776.

Colonists

People who were sent to live in new territories but remained subjects or citizens of their parent country; often involved in the colonization processes of different continents.