Cartel members have an incentive to cheat on the cartel because:

Question

Quizplus · Accepted Answer

Cartel members have an incentive to cheat on the cartel if their marginal revenue (MR) is not equal to the cartel's marginal cost (MC). If a member's MR is higher than the cartel's MC, they can increase their profits by producing more than their assigned output quota and selling it on the market. This will reduce the overall price of the cartel and cause the other members to lose out on profits. Therefore, there is an incentive for members to cheat when their MR is higher than the cartel's MC.

Cartel Members Have an Incentive to Cheat on the Cartel