As the number of firms in a cartel increases,what happens
A)The monopoly outcome becomes more likely.
B)The magnitude of the price effect increases.
C)Each seller becomes more concerned about its own impact on the market price.
D)The monopoly outcome becomes less likely.

Question

Quizplus · Accepted Answer

As the number of firms in a cartel increases, it becomes more difficult to maintain the collusion and coordinate to act like a monopoly. Each firm has a smaller share of the market, and each firm becomes less concerned about its own impact on the market price, as there are more firms to share the responsibility. Therefore, the monopoly outcome becomes less likely with increasing numbers of firms in a cartel.

As the Number of Firms in a Cartel Increases,what Happens