Cartel Members Have an Incentive to Cheat on the Cartel

question 113

Multiple Choice

Cartel members have an incentive to cheat on the cartel because:

• A) the cartel does not maximize profits.
• B) the cartel price is the competitive price.
• C) each member's output quota is too high.
• D) each member's MR is not equal to the cartel's MC.
• E) the industry profit would be higher under competitive conditions.

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Definitions:

Biconditional Statement

A statement that is true only if both components are simultaneously true or false.

Consistent

In logic and mathematics, a set of statements or propositions is consistent if they do not lead to a contradiction, meaning they can all be true at the same time.

Contingency

An impending event or circumstance with potentiality but lacks predictability with surety.

Symbolic Form

A way of representing logical sentences using symbols and variables instead of words.