In the cartel model

Question

In the cartel model

Quizplus · Accepted Answer

In the cartel model, firms coordinate their decisions to act as a multiplant monopoly, meaning that they work together as if they were a single large firm, pooling their resources and coordinating their prices and outputs. Option A is incorrect as it assumes that firms in cartels believe that their products have an elastic demand. Option B is incorrect as cartel firms tend to act as price setters rather than price takers. Option C describes the dominant firm model, which is different from the cartel model. Thus, the correct answer is D.

In the Cartel Model