For Cartels, as the Number of Firms (Members of the Cartel)

question 94

Multiple Choice

For cartels, as the number of firms (members of the cartel) increases,

• A)the monopoly outcome becomes more likely.
• B)the magnitude of the price effect decreases.
• C)the more concerned each seller is about its own impact on the market price.
• D)the easier it becomes to observe members violating their agreements.

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Definitions:

Factory Overhead

Refers to the indirect manufacturing costs that are not directly traceable to specific units produced, including utilities, depreciation, and salaries for factory staff.

Period Cost

Expenses that are not directly tied to the production process and are expensed in the period in which they are incurred, such as selling, general, and administrative expenses.

Expense

An expense is an outflow of money or other valuable resources that an individual, company, or organization incurs as a result of performing its normal operations.

Indirect Labor

Indirect labor refers to wages paid to employees who are not directly involved in the production of goods or services, such as supervisors and maintenance workers.