After participating members of a cartel form an agreement on common prices and output quotas, then an individual firm can increase its own profits by
A) decreasing production.
B) decreasing prices.
C) advertising.
D) paying its employees higher wages.

Question

Quizplus · Accepted Answer

By decreasing prices, an individual firm can sell more than its quota, thus increasing its profits. This strategy undercuts the agreed-upon price, attracting more customers to the firm at the expense of other cartel members.

After Participating Members of a Cartel Form an Agreement on Common