Question

When deciding on output levels, members of a cartel A. Set their output where MR=MC B. Produce the same level of output as if they were in a competitive market C. Take into account the impact of changes on members' profits D. Act as if they were monopolies.

Answer 1

Answer: Option(D) is correct.

Explanation:

Correct option:  Act as if they were monopolies.

Cartel is a group of few firms that work towards the common goal. Because all the cartel members works together, that's why they act like a monopolies.

They decided to produce at a level where their combined marginal revenue is equal to the combined marginal cost.

Because they behave like a monopolist, so they sell lesser quantity at a higher prices than would be in a perfectly competitive market.