Identify a Statement That Is True of a Cartel

question 106

Multiple Choice

Identify a statement that is true of a cartel.

• A)In a cartel, all firms produce the same amount of output and earn the same profit.
• B)In a cartel, all firms produce the same amount of output but earn different amounts of profit because their costs differ.
• C)In a cartel, firms produce different amounts of output but earn the same profit.
• D)In a cartel, firms with higher average costs produce more so that all firms earn the same profit.
• E)In a cartel, firms with lower average costs often earn higher profits.

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Definitions:

Perfect Competitor

An idealized market structure characterized by a large number of small firms, each being a price taker, with no single firm able to influence the market price.

Long Run

A period in economics where all factors of production and costs are variable, allowing complete industry adjustment.

Marginal Revenue

The extra revenue generated from the sale of an additional unit of a product or service.

Marginal Cost

Marginal cost is the cost of producing one additional unit of a good or service, crucial for decision-making processes in economics and business.