Suppose All of the Firms in a Perfectly Competitive Industry

question 47

Multiple Choice

Suppose all of the firms in a perfectly competitive industry form a cartel and agree to restrict output, thereby raising the price of the product. Individual Firm A will gain the most from the existence of the cartel if

• A) all firms, except Firm A, cooperate and restrict output.
• B) all firms, including A, cooperate and restrict output.
• C) no firms restrict output.
• D) Firm A restricts output, while the other firms do not.
• E) all firms revert back to their competitive outputs.

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