A Collusive Agreement to Form a Cartel Is Difficult to Maintain

question 127

Multiple Choice

A collusive agreement to form a cartel is difficult to maintain because

• A) each member firm can increase its own profits by cutting its price and selling more.
• B) forming a cartel is legal but frowned upon throughout the world.
• C) supply will decrease because of the high cartel price.
• D) demanders will rebel once they realize a cartel has been formed.
• E) each firm can increase its profit if it decreases its production even more than the decrease set by the cartel.

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Definitions:

Irritability

A state of being easily annoyed or angered, often a symptom of stress, fatigue, or underlying health issues.

Irregular Rhythms

Abnormal patterns in the sequence of heartbeats, often relating to health issues.

Basic Trust

A term coined by psychologist Erik Erikson describing the first stage of psychological development wherein a child learns whether the world is trustworthy and safe.

Erikson

A psychologist known for his theory on the psychosocial development of human beings.