Which of the Following Statements Regarding Cartels Is Not Correct

question 45

Multiple Choice

Which of the following statements regarding cartels is not correct?

• A)Cartels are sometimes difficult to maintain because a member can cheat by raising its price above the agreed price.
• B)Cartels restrict industry output in order to raise price.
• C)Cartels are inherently stable, because oligopolistic firms rarely change price.
• D)are easier to establish and maintain when the cost functions of the individual members are more similar to one another.

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Definitions:

Personal Casualty Losses

Financial losses suffered from the sudden, unexpected, or unusual damage or loss of property due to events like natural disasters, that may be deductible under certain conditions.

Deductibility

The ability of an expense to be subtracted from gross income, reducing taxable income and the amount of tax owed.

Investment Interest Expense

Interest paid on money borrowed to purchase taxable investments, potentially deductable up to the amount of net investment income.

Net Investment Income

The income received from investment assets (like dividends, interest, and capital gains) after deducting related expenses.