When a cartel operates effectively, industry output is similar to a _____; when a cartel breaks down, industry output is similar to a _____.
A) monopoly; perfectly competitive industry
B) monopolistically competitive industry; monopoly
C) monopolistically competitive industry; perfectly competitive industry
D) perfectly competitive industry; monopoly

Question

Quizplus · Accepted Answer

When a cartel operates effectively, it acts similarly to a monopoly by restricting output to raise prices. When a cartel breaks down, the industry resembles a perfectly competitive industry, where firms cannot influence prices and produce at a higher output level.

When a Cartel Operates Effectively, Industry Output Is Similar to a _____;