The Two Tendencies of a Firm in a Cartel Are

question 75

Multiple Choice

The two tendencies of a firm in a cartel are the incentive to:

• A) cheat to maximize joint profits and the incentive to raise prices.
• B) cheat and avoid collusion and the incentive to raise price to maximize the firm's share of profits.
• C) increase output in order to minimize per-unit cost and the incentive to reduce price in order to maximize joint profit.
• D) cooperate to maximize joint profits and to cheat on the agreement in order to increase the firm's share of the profit.

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Definitions:

Presale Testing

The process of evaluating the potential market success of a new product or service before its full-scale launch.

Probability

The quantification of an event's occurrence probability, expressed with a number from 0 to 1.

Computer Chip

A small piece of semiconducting material on which an integrated circuit is embedded.

Guesses

Estimates or predictions made without sufficient information or knowledge, relying on intuition rather than data.