Explanation Option (c): If an oligopolistic industry organizes itself as a cooperative cartel, it will produce a quantity of output that is less than the competitive level and equal to the monopoly level. When a cartel is formed, the market is just like a monopoly, and the member firms will agree on the monopoly outcome because that outcome maximizes the total profit of each member firm. As compared to the competitive market, it produces less quantity of output, but it produces a quantity of output that equals to the monopoly level. Thus, the option “c” is correct. Option (a): The oligopoly cartel will produce a quantity of output that is less than the competitive level and equal to the monopoly level...

Oligopoly market and cartel.

EBK STUDY GUIDE FOR MANKIW'S PRINCIPLES

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ISBN: 9781337509848

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Oligopoly market and cartel.

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