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Homework answers / question archive / Firms in oligopoly face a temptation to form a cartel and collude because a cartel _____
Firms in oligopoly face a temptation to form a cartel and collude because a cartel _____.
a. allows firms to act like a monopoly and increase their profits.
b. leads to a more competitive market.
c. is a legal means of increasing economic profit
d. is a stable means of making long-run maximum economic profit.
When firms collude, it forms a situation where there is a single body (i.e. the cartel) acting as the monopoly to set the price as high as they want in order to maximize income.