If two firms form a successful cartel, then the output that the two produce in total will
A)be equal to the output in perfect competition.
B)be equal to the output of a monopoly market.
C)be greater than the output without the cartel.
D)be the same as if the market had many firms.

Question

Quizplus · Accepted Answer

A cartel is a group of firms that coordinate their output and pricing decisions to maximize joint profits. In a successful cartel, the firms act like a single monopoly entity, controlling the market price and restricting output to increase profits. Therefore, the combined output of the two firms will be equal to the output of a single monopoly market.

If Two Firms Form a Successful Cartel, Then the Output