Once a Cartel Determines the Profit-Maximizing Price

question 29

Multiple Choice

Once a cartel determines the profit-maximizing price,

• A)all members of the cartel have a strong incentive to abide by the agreed-upon price.
• B)each member will face the temptation to cheat on the cartel price to increase its sales and profit.
• C)changes in the output of any member firms will have no impact on the market price.
• D)entry into the industry of rival firms will have no impact on the profit of the cartel.
• E)entry into the industry of rival firms will raise cartel profit as long as the new firms join the cartel.