Cheating by firms that belong to a cartel is an example of
A) profit maximization.
B) the need for stronger competition legislation.
C) perfect competition.
D) the prisoner's dilemma.
E) the equilibrium principle.

Question

Quizplus · Accepted Answer

Cheating by firms in a cartel is an example of the prisoner's dilemma because each firm has an incentive to cheat to increase its own profit, but if all firms cheat, the cartel agreement collapses, leading to worse outcomes for all.

Cheating by Firms That Belong to a Cartel Is an Example