Author Question: Cartels are typically subject to cheating by their members because A) if the other firms stick to ... (Read 103 times)

EY67 · **on:** Jun 29, 2018

Cartels are typically subject to cheating by their members because

A) if the other firms stick to the agreement, a firm can increase its profits by cutting its price.
B) barriers to entry do not exist so new entrants will join.
C) the U.S. Justice Department will punish any cartel agreement before the cartel has had a chance to operate.
D) product differentiation allows the firms in the cartel to cheat.

Question 2

Paul's monthly income decreased from 2,500 to 2,300. As a result, he decreased the number of DVDs he rents per month from 5 to 4. Paul's demand for DVD rentals is

A) price elastic.
B) price inelastic.
C) income elastic.
D) income inelastic.