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Cartel pricing is: a) Is more likely to be maintained when there number of firms in the cartel is large, b) Increases both price and industry output, c) Is most likely to be maintained when there is free entry into the market, d) Establishes a price equal to the marginal cost of the average firm, e) Is illegal under the terms of the Sherman Act
Cartel pricing is:
a) Is more likely to be maintained when there number of firms in the cartel is large,
b) Increases both price and industry output,
c) Is most likely to be maintained when there is free entry into the market,
d) Establishes a price equal to the marginal cost of the average firm,
e) Is illegal under the terms of the Sherman Act.
Expert Solution
- The answer to this question is e) Is illegal under the terms of the Sherman Act.
The Sherman Act emphasizes the maintenance of market competition with the fair and legal trade between the parties. Cartel pricing refers to the pricing strategy under which two or more firms collude and set their own price to make a dominant position in the market, which is against the Sherman Act.
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