In a Cartel, the Incentive to Cheat Is Significant Because

question 61

Multiple Choice

In a cartel, the incentive to cheat is significant because

• A)each individual member has the incentive to restrict its own output to maximize profit.
• B)the marginal cost is equal to the cartel price at the profit-maximizing output level.
• C)each firm has the incentive to lower its price to sell more than the allotted amount.
• D)each firm has the incentive to cheat by raising its price to maximize profit.
• E)price is less than marginal cost for each member of the cartel.

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