For a firm that operates in an input market cartel that has successfully coordinated input prices among the cartel members,the marginal cost of the input:
A)exceeds the input's price.
B)is less than the input price.
C)is constant and equals unity.
D)is zero.

Question

Quizplus · Accepted Answer

In a cartel, firms coordinate to set higher prices for inputs. Therefore, the marginal cost of the input to the firm exceeds the input's price due to the cartel's price-setting above competitive levels.

For a Firm That Operates in an Input Market Cartel