A market with four firms in competition with each other has a equilibrium price of $25 and equilibrium quantity of 200,000. If the four firms form a cartel, the cartel, set price will be ________than $25 and the set quantity will be________ than 200,000.

Question

Quizplus · Accepted Answer

When firms form a cartel, they typically reduce output to increase prices, aiming to maximize their collective profits. This results in a higher price and lower quantity than in a competitive market.

A Market with Four Firms in Competition with Each Other