Explain why member firms of a cartel like OPEC have incentives to agree to a low cartel production level and then produce more than its quota
What will be an ideal response?
A low cartel production level results in a high market price for oil. Thereafter, each firm has an incentive to unilaterally cheat on the agreement by producing beyond its quota. Of course, ultimately if everyone cheats then the price of oil will fall, but at least for a while some members will earn higher profits than they would if they had adhered to their quotas.
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Marginal cost:
A. increases then decreases, as output increases, to reflect marginal product. B. is calculated as change in total output divided by change in total cost. C. is calculated as change in total cost divided by change in total output. D. None of these is true.
A counterfactual is
A. what happens when there are no facts. B. what would have happened if the treatment group had not received the treatment. C. a legal term describing the process of proving that a negative is the actual truth. D. none of these answer options are correct.
External costs occur only with production and not consumption.
Answer the following statement true (T) or false (F)
Under current tax laws, individuals do not pay taxes on health insurance benefits they receive from their employers. As a result
A) the federal government spends more than it receives in tax revenue. B) individuals are encouraged to want generous health coverage that reduces their incentives to cut costs. C) the quality of health care provided is less than it would be if benefits were taxed. D) politicians are encouraged to raise income and payroll taxes.