Why would a member of a cartel cheat?
What will be an ideal response?
After setting a common price or production quotas, a member of a cartel can earn more profits individually by "cheating": setting a slightly lower price than the cartel price and producing and selling more output than specified under the cartel agreement.
You might also like to view...
The income-expenditure model is best used for short-run analysis of economic fluctuations
Indicate whether the statement is true or false
Pretty Polly produces dresses for little girls. At its current advertising level, Pretty Polly's marginal cost of advertising is $500,000 and their marginal benefit is $500,000. Which of the following is true?
A) The firm should increase the amount of advertising to increase its net profit. B) The firm is currently maximizing its net profit. C) The firm should reduce the amount of advertising to increase its net profit. D) The firm should double the amount of advertising.
Favorable supply shocks should produce rapid economic growth with falling inflation
a. True b. False Indicate whether the statement is true or false
The value of exports minus the value of imports in a period is called the:
A. trade balance. B. trade gap. C. international equilibrium. D. budget balance.