Three firms join forces and form a cartel.The market price set by the cartel will be equivalent to the price set by a
A) monopolist.
B) monopolistically-competitive firm.
C) perfectly-competitive firm.
D) duopolist.
E) perfect price-discriminating monopolist.

Question

Quizplus · Accepted Answer

When three firms join forces and form a cartel, they act as a single monopolist and collectively control the market supply. Therefore, the market price set by the cartel will be equivalent to the price set by a monopolist.

Three Firms Join Forces and Form a Cartel