A market with four firms in competition with each other has a equilibrium price of $6 and equilibrium quantity of 100,000. If the four firms form a cartel, the cartel, set price will be ________than $6 and the set quantity will be _________ than 100,000.

Question

Quizplus · Accepted Answer

When firms form a cartel, they act together to maximize their collective profit, which typically involves reducing the quantity supplied to increase the price. This leads to a higher price and lower quantity than in a competitive market.

A Market with Four Firms in Competition with Each Other