question 31\ncartels find it difficult to maintain long - term collusive agreements because\na) each firm in…

question 31\ncartels find it difficult to maintain long - term collusive agreements because\na) each firm in the cartel has a profit incentive to cheat on the agreement\nb) governments tend to subsidize monopolies, but not oligopolies\nc) profits for the firms within the cartel eventually fall to zero\nd) workers eventually form labor unions to demand higher wages, raising production costs\ne) corporate tax rates are higher for firms involved in cartels

question 31\ncartels find it difficult to maintain long - term collusive agreements because\na) each firm in the cartel has a profit incentive to cheat on the agreement\nb) governments tend to subsidize monopolies, but not oligopolies\nc) profits for the firms within the cartel eventually fall to zero\nd) workers eventually form labor unions to demand higher wages, raising production costs\ne) corporate tax rates are higher for firms involved in cartels

Answer

Brief Explanations:

Cartels are agreements among firms in an oligopoly to act like a monopoly and restrict output to increase prices and profits. However, each firm has an incentive to cheat by producing more than the agreed - upon quantity to increase its individual profit. This self - interest undermines the long - term stability of the collusive agreement.

Answer:

A. each firm in the cartel has a profit incentive to cheat on the agreement