Cartels are:
A) extremely powerful and able to keep prices and profits high indefinitely.
B) unstable and tend to lose market power over time.
C) like monopolies that try to earn normal or competitive profits.
D) firms that face perfectly elastic demand curves and increase profits by restricting output and raising prices.

Question

Quizplus · Accepted Answer

Cartels are groups of firms that collude to restrict output and raise prices. While they may be able to gain market power initially, they are typically unstable and tend to lose market power over time due to cheating and the entry of new firms. Therefore, option B is the best choice as it accurately describes the likely outcome for cartels.

Cartels Are