PRC-3 · Chapter 12 · Question 52 of 69
In an oligopolistic market, what is the primary economic purpose of forming a 'Cartel'?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) To ensure that a dominant group of producers charge the same price and restrict output
Explanation
A cartel is a collusive agreement between oligopoly firms to act like a joint monopoly, fixing prices and restricting overall supply to maximize their joint supernormal profits.
More Firm Theory MCQs
- Q54Which of the following statements regarding short-run cost curves is mathematically correct?
- Q55When a firm's Average Cost (AC) is visibly rising on a graph, what must definitively be true about its Marginal Cost (MC)?
- Q56For a downward-sloping demand curve, the firm's Marginal Revenue (MR) is strictly greater than zero only if:
- Q57By substituting the Total Revenue (TR) equation into the Average Revenue (AR) formula, we mathematically observe that AR is always equal to:
- Q58Price discrimination by a monopoly (charging different prices to different groups) is impossible or highly ineffective if: