Which of the Following Reflects the Incentive Structure Confronted by a Typical

question 173

Multiple Choice

Which of the following reflects the incentive structure confronted by a typical firm in a cartel?

• A) If I alone cheat, I'm better off; if everyone cheats, I'm worse off.
• B) I can never do better for myself than by following agreed-upon cartel policies.
• C) If everyone cheats, I'm better off and so is everyone else in the cartel.
• D) If I suspect others are planning to cheat, I'll do best for myself by deciding not to cheat.

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Definitions:

DDT

Dichloro-diphenyl-trichloroethane, a synthetic pesticide known for its environmental persistence and effects on wildlife.

Parathion

A highly toxic organophosphate pesticide used to control insects in agricultural settings.

Crop Rotation

An agricultural practice of growing different types of crops in the same area in sequential seasons to improve soil health and reduce pests.

Monocultures

The agricultural practice of growing a single species, variety, or breed of plant or animal in a field or farming system at a time.