A cartel is an organization of firms a. dominated by one firm, which is usually referred...
A cartel is an organization of firms
a. dominated by one firm, which is usually referred to as the price leader.
b. that attempts to increase total (or industry) demand for their product.
c. that reduces output and increases price in an effort to increase joint profits.
d. that deliberately attempts to disrupt the market for political reasons.
Homework Answers
Answer
Option c
c. that reduces output and increases price in an effort to increase joint profits.
A cartel is fixing price and quantity to increase profit by reducing output and raising the price. The firms in the market work jointly as a monopoly under cartel and produce monopoly output and charges monopoly price so the joint profit increases.
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