Principles of Microeconomics, 7th Edition

Published by South-Western College
ISBN 10: 128516590X
ISBN 13: 978-1-28516-590-5

Chapter 17 - Part V - Oligopoly - Quick Check Multiple Choice - Page 367: 3

Answer

Option A.

Work Step by Step

Because the cartel is not cooperating, they will face the prisoner's dilemma; which states that the firms will compete with each other to gain most market share. Because the firms are competing, one firm alone is not a price maker, which means they will produce at values above that of a monopoly. Next, they will produce at a value below the competitive level because consumers are not the sole determinants of price, rather the firms in the non-cooperating cartel.
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