Once a Cartel Determines the Profit-Maximizing Price

question 29

Multiple Choice

Once a cartel determines the profit-maximizing price,

• A)all members of the cartel have a strong incentive to abide by the agreed-upon price.
• B)each member will face the temptation to cheat on the cartel price to increase its sales and profit.
• C)changes in the output of any member firms will have no impact on the market price.
• D)entry into the industry of rival firms will have no impact on the profit of the cartel.
• E)entry into the industry of rival firms will raise cartel profit as long as the new firms join the cartel.

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Definitions:

Rudimentary Form

The most basic or primitive stage of development.

Embryonic Stage

A period in prenatal development from approximately 2 to 8 weeks after fertilization, during which major body structures and organs begin to develop.

Fetus

A developing human from roughly eight weeks after conception until the time of birth.

Motor Reflexes

Involuntary movements or actions that occur in response to specific stimuli, demonstrating the body's automatic response mechanisms.