Cartel members are motivated to increase production beyond their quotas because they are at a point where, if they can increase their own production without affecting the cartel price,

Question

Quizplus · Accepted Answer

If cartel members can increase their own production without affecting the cartel price, it means that the price remains the same and they can sell more units. This will result in an increase in total revenue, and as long as their marginal revenue (the additional revenue earned from selling one more unit) exceeds their marginal cost (the additional cost incurred from producing one more unit), they will make a profit. Therefore, the answer is D.

Cartel Members Are Motivated to Increase Production Beyond Their Quotas