In imperfectly competitive industries,producers' agreements to restrict output tend to be unstable because each firm has an incentive to:
A) produce more than its output quota.
B) lower both its price and its output.
C) raise prices above the cooperative price.
D) establish competitive price and output levels.

Question

Quizplus · Accepted Answer

In imperfectly competitive industries, firms have an incentive to produce more than their output quota to increase their individual profits, leading to instability in agreements to restrict output.

In Imperfectly Competitive Industries,producers' Agreements to Restrict Output Tend to Be