After Participating Members of a Cartel Form an Agreement on Common

question 209

Multiple Choice

After participating members of a cartel form an agreement on common prices and output quotas, then an individual firm can increase its own profits by

• A) increasing production.
• B) increasing prices.
• C) leaving the cartel.
• D) incurring higher input costs.

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Definitions:

Sales

The total amount of goods or services sold by a company, serving as a major component of its revenue.

Cost-volume-profit Analysis

A method used to determine how changes in costs and volume affect a company's operating income and net income.

Service Companies

Businesses that provide intangible products or services to consumers or other businesses rather than manufacturing goods.

Fixed

Costs that do not change with the level of production or sales activity, such as rent, salaries and insurance.