Which of the Following Statements Regarding Cartels Is Not Correct

question 45

Multiple Choice

Which of the following statements regarding cartels is not correct?

• A)Cartels are sometimes difficult to maintain because a member can cheat by raising its price above the agreed price.
• B)Cartels restrict industry output in order to raise price.
• C)Cartels are inherently stable, because oligopolistic firms rarely change price.
• D)are easier to establish and maintain when the cost functions of the individual members are more similar to one another.

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Definitions:

Coupon Rate

The yearly interest rate a bond issuer pays to its holders, usually shown as a percent of the bond's nominal value.

Par Value

The nominal or face value of a bond, share of stock, or coupon as stated by the issuer, which is not related to its market value.

Moody's

A credit rating agency that evaluates the creditworthiness of borrowers, ranging from governments to private enterprises, and assigns ratings that reflect the risk of default.

Junk Bonds

High-risk, high-yield bonds rated below investment grade by credit rating agencies, often issued by companies with poorer credit ratings.