One of the fundamental problems a cartel faces is
A) to determine how much each producer will decrease its output.
B) to determine how much each producer will increase its output.
C) to determine how much each producer will lower it price.
D) to determine how much each producer will lower its profit.

Question

Quizplus · Accepted Answer

The fundamental problem a cartel faces is to determine how much each producer will decrease its output. This is because a cartel aims to limit the supply of goods in order to raise prices and increase profits. However, each member of the cartel has an incentive to cheat by increasing its output and reaping the benefits of higher prices without having to decrease its own production. Therefore, the challenge for the cartel is to balance the desire to limit supply with the need to ensure that each member is committed to the agreed-upon output levels.

One of the Fundamental Problems a Cartel Faces Is