Answer the following statements true (T) or false (F)
1) All else equal, a cartel sets the price higher and produces less than in a competitive market.
2) Each firm in a cartel has an incentive to cheat on the agreement and produce less than the bargained amount.
3) Firms in a cartel produce a quantity at which marginal revenue exceeds marginal cost.
4) If new firms enter a cartel market, the cartel can either incorporate the new firms into the agreement or exclude them, but regardless of inclusion or exclusion, the probability that the cartel will survive decreases.
5) In order to sustain a cartel, members are required to sign binding contracts.
1) TRUE
2) FALSE
3) TRUE
4) TRUE
5) FALSE
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The Fabian socialists argued that there would be no social cost associated with
a. a proportional income tax. b. the sharp price declines caused when a speculative bubble bursts. c. limits on employer monitoring imposed to protect employees' privacy. d. the appropriation of rents by the government.
The payoff matrix below shows the payoffs (in millions of dollars) for two firms, A and B, for two different strategies, investing in new capital or not investing in new capital. 
An industry spy from firm A comes to firm B and offers to pay B in exchange for B's certain and enforceable promise to not invest. What is the most that firm A will be willing to pay B to not invest?
A. $35 million. B. $20 million. C. $30 million. D. $50 million.
Which of the following will become smaller and smaller as the firm expands output?
a. average total cost. b. average fixed cost . c. marginal cost. d. total fixed cost.
Gains from trade can be realized if each country specializes in the production of a good in which it has a comparative advantage
a. True b. False Indicate whether the statement is true or false