An individual ﬁrm in a cartel is likely to earn more proﬁts by cheating on the cartel and reducing prices.

Name: An individual ﬁrm in a cartel is likely to earn more proﬁts by cheating on the cartel and reducing prices.
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Question

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By reducing prices and increasing market share, the firm can potentially earn more profits in the short term. However, if all firms in the cartel start cheating, it can lead to a collapse of the cartel and price war, which can be detrimental for all firms in the long term.

An Individual ﬁRm in a Cartel Is Likely to Earn