A cartel maximizes industry profit by:

Question

Quizplus · Accepted Answer

To maximize industry profit, a cartel should produce where MR = MC, which is also the profit-maximizing output level for a monopolist. By doing so, the cartel can avoid excessive production costs and maintain a higher price level than a competitive market would allow. Eliminating quotas could result in oversupply and price competition among cartel members, reducing their profits. Producing at the kink in the demand curve may not necessarily result in maximizing industry profit. Giving secret price concessions may not be feasible for all cartel members and may lead to a breakdown of the agreement. Producing more output than a monopoly would also not result in maximizing industry profit.

A Cartel Maximizes Industry Profit By