Each firm in a cartel has an incentive to chisel because market price exceeds
A)marginal cost.
B)average cost.
C)average variable cost.
D)average fixed cost.

Question

Quizplus · Accepted Answer

Firms in a cartel have an incentive to chisel (cheat) because market price exceeds their marginal cost. If they produce less than the agreed output level, they can raise their price and increase profits.

Each Firm in a Cartel Has an Incentive to Chisel