In an economist's view, a cartel usually offers to society
A)all the cost benefits of large-scale production and none of the allocative inefficiencies of monopoly.
B)all the cost benefits of large-scale production and all of the allocative inefficiencies of monopoly.
C)none of the cost benefits of large-scale production and none of the allocative inefficiencies of monopoly.
D)none of the cost benefits of large-scale production and all of the allocative inefficiencies of monopoly.

Question

Quizplus · Accepted Answer

Cartels restrict output and raise prices, leading to higher profits for cartel members but allocative inefficiencies for society. While cartels may benefit from some cost advantages of large-scale production, these benefits are not passed on to consumers in the form of lower prices. Therefore, cartels offer none of the cost benefits of large-scale production and all of the allocative inefficiencies of monopoly.

In an Economist's View, a Cartel Usually Offers to Society