Question

In a cartel, participating members can cheat byA) 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.

Answer 1

Answer:

The correct answer is D) charging a slightly lower price and raising production.

Explanation:

By having lower prices than the rest of the cartel's members, this participant attracts customers that would otherwise go to the cartel as a whole. This allows this participant to raise production because now they can sell it. However this is done at the expense of lowering the sales of the other members of the cartel, thus this is how members can cheat within a cartel.