A Cartel Can Only Succeed in the Long Run

question 102

Multiple Choice

A cartel can only succeed in the long run

• A) if all firms are experiencing decreasing returns to scale.
• B) if the long- run market supply curve is elastic.
• C) with authorization from the government.
• D) if there is free entry of new firms.
• E) if member firms cooperate and resist their individual incentives.

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Definitions:

Salvage Value

The estimated resale value of an asset at the end of its useful life, reflecting what a company expects to recover, less disposal costs, once an asset is no longer needed for business operations.

Straight-Line Method

A method of calculating depreciation or amortization by evenly spreading the cost of an asset over its useful life.

Net Equipment Capital Cost

The total cost of acquiring equipment for business operations, minus any salvage value or depreciation.

Increased Working Capital

Refers to an uptick in the company's current assets minus its current liabilities, indicating improved short-term financial health.