Which statement about cartels is TRUE?
A) Cartels are sustainable because they split their joint economic profits.
B) Cartels are illegal throughout the world.
C) An individual member of a cartel could increase its profits by dropping its price below the established price.
D) Cartels maximize their profits where marginal revenue equals price.

Question

Quizplus · Accepted Answer

Cartels aim to control prices and restrict competition, but an individual member can benefit by undercutting the agreed price to increase its market share and profits, despite the risk of destabilizing the cartel. This temptation to cheat on the agreement for individual gain is a well-known issue within cartels.

Which Statement About Cartels Is TRUE