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Consider a Cartel Consisting of Several Firms That Is Maximizing

Question 40

Multiple Choice

Consider a cartel consisting of several firms that is maximizing total profit.If one firm cheats on the cartel agreement by cutting its price and increasing its output,the best response of the other firms is to


A) cancel the cheating firm's membership in the cartel.
B) continue to sell at the agreed-upon price.
C) raise their price to recapture lost profit.
D) cut their prices as well.
E) cut output to keep total cartel output at its original level.

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