A cartel of four firms that controls 100 percent of the sales in a market, and faces the same cost schedules of a monopolist, will set a price somewhat lower than the monopoly price for its product.

Question

Quizplus · Accepted Answer

A cartel of firms acting together to control 100 percent of the sales in a market and facing the same cost schedules as a monopolist will aim to maximize joint profits, thus setting a price similar to that of a monopolist, not lower.

A Cartel of Four Firms That Controls 100 Percent of the Sales