Even Though a Cartel Is Often Profitable for Its Members

question 28

Multiple Choice

Even though a cartel is often profitable for its members, cartel arrangements contain the seeds of their own disintegration because

• A) a price maintained above each cartel member's marginal cost provides each member with an incentive to offer secret price reductions to attract additional customers.
• B) the profits earned by cartel members will induce others to enter the industry.
• C) cartel members will attempt to garner more of the total profit for themselves by cheating on their agreement with other members.
• D) all of the above are correct.

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Definitions:

Standard Errors

A statistical term that describes the estimated standard deviation of a sampling distribution of a statistic, often used in hypothesis testing.

Sample Means

The average value derived from a subset of a larger population, used as an estimate of the overall population mean in statistical analysis.

Subjective Sampling

A sampling technique where the samples are selected based on the judgment of the researcher, rather than using random selection methods.

Judgment Sampling

A non-probability sampling technique where the researcher selects units to be sampled based on their knowledge and professional judgment.