Use the following to answer questions:
Figure: Demand 1
-(Figure: Demand 1) A cartel facing the market in this diagram would try to cause industry output to:
A) increase from 5 to 10.
B) increase from 3 to 6.
C) decrease from 6 to 3.
D) decrease from 5 to 2.

Question

Use the following to answer questions:
Figure: Demand 1 
-(Figure: Demand 1) A cartel facing the market in this diagram would try to cause industry output to:
A) increase from 5 to 10. 
B) increase from 3 to 6. 
C) decrease from 6 to 3. 
D) decrease from 5 to 2.

Quizplus · Accepted Answer

A cartel is a group of producers that collaborate to restrict output and increase prices. In this case, the cartel would try to decrease industry output from 6 to 3 in order to increase the price and profits for the producers. By limiting supply, they can cause an upward shift in the demand curve, resulting in higher prices for the same level of output. Therefore, the best choice is C, decrease from 6 to 3.

Use the Following to Answer Questions