If a Cartel Is Unable to Monitor Its Members and Punish

question 56

Multiple Choice

If a cartel is unable to monitor its members and punish those firms that violate the agreement,then

• A) the member firms will each act as price setters.
• B) the cartel will prosper in the long run.
• C) the market will become a monopoly.
• D) the cartel will fail.

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Definitions:

Experiment

A scientific procedure undertaken to make a discovery, test a hypothesis, or demonstrate a known fact by controlling and varying one or more variables.

Mutually Exclusive

Events that cannot occur at the same time, implying that the occurrence of one event excludes the occurrence of the other.

Events

Outcomes or occurrences that can be clearly defined, measured, and distinguished from other events in a probability context.

Outcomes

The possible results or consequences of an experiment, procedure, or situation.