What is a cartel?
What will be an ideal response?
A cartel is a group of firms that cooperate with each other to set prices higher than they would if they competed with each other. Explicit price fixing is illegal in the United States, so cartels are difficult to maintain. They are also difficult to maintain because each firm in the cartel has an incentive to cheat on the arrangements made by the cartel.
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The United States is an example of a mixed economy.
Answer the following statement true (T) or false (F)
The CPI is a measure of the:
A. rate of inflation. B. real wage. C. price of a specific good or service. D. average level of prices relative to prices in the base year.
If we consider the reality that each worker has different skills, then the production possibilities frontier
A. cannot be drawn, as too many variables would need to be taken into consideration. B. would display an increasing opportunity cost of a good as more of that good is produced. C. would display a decreasing opportunity cost of a good as more of that good is produced. D. would display a constant opportunity cost of a good as more of that good is produced.
Which firm in Figure 26.5 is using marginal cost pricing?
A. Firm C only. B. Firms B and D only. C. Firm B only. D. All of the firms are using marginal cost pricing.