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Author Question: Why do cartels tend to break up? What will be an ideal ... (Read 155 times)

penza

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on: Jul 1, 2018
Why do cartels tend to break up?
 
  What will be an ideal response?

Question 2

Many car owners and car dealers describe their different cars for sale in the local newspapers and list their asking price. Many people shopping for a used car consider the different choices listed in the paper.
 
  The market for used cars could be described as A) relatively competitive.
  B) perfectly competitive.
  C) non-competitive.
  D) having high transaction costs.


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canderson530

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Reply #1 on: Jul 1, 2018
Answer to Question 1

There are many reasons, but one of the best is that there is an incentive to cheat. While the cartel maximizes joint profits, individual profit could be increased if the firm could sell more at the cartel price. If everyone does that, output increases and the price falls.

Answer to Question 2

A


penza

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Reply #2 on: Jul 1, 2018
Thank you


canderson530

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Reply #3 on: Jul 1, 2018
No problemo


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