Compared with a competitive market, a cartel as a whole will produce
A) less output in order to increase prices.
B) more output in order to increase prices.
C) less output in order to decrease prices.
D) more output in order to decrease prices.

Question

Quizplus · Accepted Answer

Cartels restrict output to increase prices above competitive levels, thereby increasing their profits. This is because by collectively reducing supply, the price on the market increases due to the lower availability of the product.

Compared with a Competitive Market, a Cartel as a Whole