Once a Cartel Determines the Profit- Maximising Price

question 20

Multiple Choice

Once a cartel determines the profit- maximising price,

• A) entry into the industry by rival firms will not affect the profit of the cartel.
• B) changes in the output of any member firm will not affect the market price.
• C) each firm faces the temptation to cheat by lowering its price.
• D) each firm faces the temptation to cheat by raising its price.

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Definitions:

Expected Flow

The anticipated movement or transfer of resources, information, or goods in a system over a period.

Future Benefits

The anticipated advantages or improvements in condition and well-being that are expected to occur in the future as a result of certain actions or investments.

Investment Decisions

Choices made by individuals or entities regarding where to allocate resources with the expectation of generating a positive return in the future.

Interest Rate

The percentage of a sum of money charged for its use, typically expressed as an annual percentage.