Cartels Often Dissolve Because

question 130

Multiple Choice

Cartels often dissolve because

• A)their members often set a time limit as to how long the cartel should exist.
• B)their members often cheat on the cartel agreements because they have incentive to.
• C)their members often find that they do not earn as high profits from the cartel as they had hoped to.
• D)firms in a cartel face different costs than firms outside a cartel.
• E)none of the above

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Definitions:

Oligopoly

A market structure characterized by a few firms dominating the market, often leading to collusive behavior and strategic planning.

Degrees of Competition

The extent to which market competition exists, characterized by the number of firms, product differentiation, and barriers to entry.

Pure Monopoly

A market structure where a single seller controls all of a product's supply and can set prices without competition.

Pure Competition

A market structure characterized by a large number of small firms, a homogeneous product, and easy entry and exit, leading to perfect competitive markets.