Other Things Being Equal, a Firm in a Cartel Will

question 109

Multiple Choice

Other things being equal, a firm in a cartel will most likely cheat on a price-fixing agreement by

• A) increasing price and restricting its output.
• B) organizing promotions of the product.
• C) secretly increasing sales to a large number of small customers.
• D) secretly lowering price and increasing sales to a few customers.

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Definitions:

Demand Schedule

A demand schedule is a table that shows the quantity of a good or service that consumers are willing and able to purchase at various price points.

Monopoly

A market structure in which a single seller controls the entire market for a product or service, facing no competition.

Natural Monopoly

A market condition where a single firm can supply a product or service more efficiently than multiple firms, leading to a lack of competition.

Patent

A Patent is a legal document granted by the government, giving an inventor exclusive rights to manufacture, use, or sell an invention for a certain number of years.