Question

In the cartel model Group of answer choices firms believe that price increases result in a very elastic demand, while price decreases result in an inelastic demand for their products. each firm acts as a price taker. one dominant firm takes the reactions of all other firms into account in its output and pricing decisions. firms coordinate their decisions to act as a multiplant monopoly.

Answer 1

Answer:

firms coordinate their decisions to act as a multi-plant monopoly..

Explanation:

A cartel is a group of countries or firms that have reached an agreement to work together in order to influence or decide market prices for goods and services by controlling sales and the level of production or quantity of output.

In the cartel model firms coordinate their decisions to act as a multi-plant monopoly, wherein the level of production or quantity of output is divided into many production plants.

The main purpose of having the cartels do this is to make marginal cost (MC) equal to marginal revenue (MR) in the various production plants, so as to create monopoly profits by making sure each plant has its own cost.