A market with three firms in competition with each other has a equilibrium price of $5 and equilibrium quantity of 10,000. If the three firms form a cartel, the cartel, set price will be _________ than $5 and the set quantity will be________ than 10,000.

Question

Quizplus · Accepted Answer

When firms form a cartel, they typically reduce output to increase prices, aiming to maximize their joint profits. This leads to a higher price and lower quantity compared to competitive equilibrium.

A Market with Three Firms in Competition with Each Other