In a cartel, participating members can cheat by
A) letting more entrants join the cartel.
B) leaving the industry.
C) producing a lower production level than the cartel quota.
D) charging a slightly lower price and raising production.

Question

Quizplus · Accepted Answer

Participating members can cheat by charging a slightly lower price than the agreed upon cartel price and increasing production to capture more market share. This strategy is effective in attracting more customers and can force other cartel members to lower their prices as well. Cheating by producing a lower production level than the cartel quota could result in a shortage of the product, which would encourage new competitors to enter the market. Letting more entrants join the cartel or leaving the industry would not be beneficial for existing cartel members as it would reduce their market power and potentially lead to price decreases.

In a Cartel, Participating Members Can Cheat by