In a cartel ?
Correct answer: D. Firms collude
- A. Firms compete against each other
- B. Price wars are common
- C. Firms use price to win market share from competitors
- D. Firms collude
Explanation
A cartel is an agreement among firms to coordinate decisions such as price or output instead of competing independently. Thus, cartel members collude, although the agreement may be unstable because each firm has an incentive to cheat.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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