If the firms of an industry form a cartel, their goal is to
A)collectively increase output and thereby earn higher profits.
B)cut back on output and raise the price of their product to earn higher profits.
C)maintain a constant level of output, but increase price to earn higher profits.
D)maintain a constant price level, but increase output to earn higher profits.

Question

Quizplus · Accepted Answer

Cartels form with the goal of maximizing their collective profits, often by agreeing to reduce output to increase prices. This reduction in supply, assuming demand remains constant or does not decrease proportionally, leads to higher prices and, consequently, higher profits for the cartel members.

If the Firms of an Industry Form a Cartel, Their