In a cartel,
A)all firms produce the same amount of output and earn the same profit
B)all firms produce the same amount of output but earn different amounts of profit because their costs differ
C)firms produce different amounts of output but earn the same profit
D)firms with higher average cost produce more so that all firms earn the same profit
E)firms with lower average cost often earn higher profits

Question

Quizplus · Accepted Answer

In a cartel, firms with lower average cost often earn higher profits because they can produce at a lower cost than their competitors, allowing them to charge a lower price while still maintaining profitability. This gives them a competitive advantage over firms with higher costs, leading to higher profits.

In a Cartel