Which of the Following Explains How a Cartel with 100

question 13

Multiple Choice

Which of the following explains how a cartel with 100 percent control might raise price to monopoly-like levels?

• A) By setting a group output level equal to a profit-maximizing monopolist, and then assigning binding quota shares to cartel members.
• B) By setting an official price that members can secretly undercut.
• C) By forbidding price competition, but allowing non-cooperative rivalry in output levels.
• D) None of the above.

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Definitions:

Sole Proprietorship

A business structure where the business is owned and operated by a single individual, who bears unlimited liability.

Corporation

A legal entity that is separate and distinct from its owners, providing limited liability to its shareholders.

Capital Account Balance

The amount of money in a company's or individual's capital account, indicating the net investment in the entity at a specific point in time.

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been deducted from total revenue, indicating the company's financial performance over a specific period.