After participating members of a cartel form an agreement on common prices and output quotas, then an individual firm can increase its own profits by
A) increasing production.
B) increasing prices.
C) leaving the cartel.
D) incurring higher input costs.

Question

Quizplus · Accepted Answer

By increasing production beyond the agreed quotas, a firm can sell more units than anticipated at the cartel's higher price, thus increasing its profits. This assumes the market can absorb the extra production without significantly affecting the overall price.

After Participating Members of a Cartel Form an Agreement on Common