A Cartel Is a Group of Firms

question 74

Multiple Choice

A cartel is a group of firms

• A) acting separately to limit output, lower price, and decrease economic profit.
• B) acting together to limit output, raise price, and increase economic profit.
• C) legally fixing prices.
• D) acting together to erect barriers to entry.
• E) that compete primarily with each other rather than the other firms in the market.

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Definitions:

Service Department

A segment within a company that provides support services to the production departments or other direct operational areas, helping them operate efficiently.

Charge Rates

Prices or rates established for services provided, often used in professional industries like law and consulting.

Residual Income

The excess of divisional income from operations over a “minimum” acceptable income from operations.

Return On Investment

A performance measure used to evaluate the efficiency or profitability of an investment, calculated by dividing the profit of an investment by its cost.