I. It aims at maximising of individual firm’s profit.
II. It decides the total output in the industry to which Cartel represents .
III. It does not fix the price at which members sell their output.
Answer from the code below :
Analyzing Cartel Characteristics
A cartel is a formal agreement among firms in an industry to coordinate their actions, acting essentially as a single entity to increase their collective profits. We need to evaluate the truthfulness of the given statements about cartels.
- Statement I: It aims at maximising of individual firm’s profit.
This statement is generally false. Cartels aim to maximize the *joint* or *collective* profits of all member firms. This often requires individual firms to restrain their output below the level that would maximize their own standalone profits. - Statement II: It decides the total output in the industry to which Cartel represents.
This statement is true. A primary function of a cartel is to control the aggregate supply within the industry. By setting a total output limit, the cartel can restrict supply, reduce competition, and increase prices, similar to a monopoly. - Statement III: It does not fix the price at which members sell their output.
This statement is generally false. To prevent competition among members and maintain higher prices, cartels typically establish a common pricing policy or fix the price at which all members must sell their products.
Conclusion on True Statements
Based on the analysis:
- Statement I is false.
- Statement II is true.
- Statement III is false.
Therefore, only Statement II accurately describes a key characteristic of a cartel.
Important Questions from Microeconomics
Which of the following statement is correct?
I. Indifference curves are sloping from left to right.
II. Higher indifference curve gives a higher level of utility.
If in a production process, all inputs are tripled, which of the following statements follows?
I. If the output is tripled, then decreasing returns to scale apply.
II. When the output is doubled, constant returns to scale apply.
III. If the output is more than tripled, then increasing returns to scale apply.
A market, in which there are a large number of firms, homogeneous product, infinite elasticity of demand for an individual firm and no control over price by firms, is termed as________.
If the two goods are substituted, then the indifference curve will be:
The government multiplier is given by (where c = MPC and t = tax rate)
