Cartel Agreements Are Difficult to Maintain Because Individual Members

question 95

Multiple Choice

Cartel agreements are difficult to maintain because individual members

• A) can gain by raising their price above the price that is best for the cartel.
• B) are often unable to police the price and output policies of other members.
• C) can gain by secretly raising their price above the price that is best for the cartel.
• D) can enforce price arrangements vigorously in court.

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Definitions:

Demand Curve

Graph of the amount of a product that buyers will purchase at different prices.

Microeconomics

Study of small economic units, such as individual consumers, families, and businesses.

Overhead Costs

These are ongoing expenses not directly attributed to creating a product or service but necessary for running a business, such as rent, utilities, and salaries.

Social Costs

Refers to the negative externalities that arise from economic activities, impacting society or the environment, not accounted for by the market.