A major reason that firms form a cartel is to
A) reduce the elasticity of demand for the product.
B) enlarge the market share for each producer.
C) minimize the costs of production.
D) maximize joint profits.

Question

Quizplus · Accepted Answer

Cartels are formed to increase profits by allowing the participating firms to jointly maximize their profits by restricting output and raising prices, thereby increasing their revenue. By coordinating their production and pricing decisions, firms can effectively reduce competition and increase their joint profitability.

A Major Reason That Firms Form a Cartel Is to