Once a Cartel Establishes Its Profit-Maximizing Price

question 210

Multiple Choice

Once a cartel establishes its profit-maximizing price:

• A) Entry into the industry of new competitors will not affect the cartel's profits
• B) Output changes by cartel members have no effect on the market price
• C) Each cartel member is tempted to cheat on the cartel price in order to add to its profit
• D) All cartel members have a strong incentive to adhere to the agreed-upon price

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Definitions:

Normally Distributed

This describes a probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean.

Average Balance

The mean value derived from summing all balances over a certain period and dividing by the number of periods.

Standard Deviation

A gauge for the level of variance or scattering of values within a dataset.

Exponential Distribution

A continuous probability distribution used to model the time between events in a process where events occur continuously and independently at a constant average rate.