Which of the following is NOT true about a cartel?
A) Members earn economic profits.
B) Members experience large economies to scale relative to industry demand.
C) Cartels will set common prices for their members.
D) Members of a cartel will have production quotas.

Question

Quizplus · Accepted Answer

Cartels do not necessarily experience large economies of scale relative to industry demand. While members of a cartel may benefit from increased market power and higher prices, there is no guarantee that they will have significant cost advantages or efficiencies compared to non-cartel firms.

Which of the Following Is NOT True About a Cartel