Cartel agreements are difficult to sustain because:
A. cartel members do not face the economic incentives inherent in a prisoner's dilemma.
B. it's a dominant strategy for each cartel member to cheat on the cartel agreement.
C. the collective payoff to all the cartel members is lower when they all abide by the cartel agreement.
D. it's usually easy to discover if one of the members has cheated.
Answer: B
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Suppose labor productivity differences are the only determinants of comparative advantage, and Brazil and Chile both produce only coffee and sugar. In Chile, either 5 units of coffee or 2 units of sugar can be produced in one day. In Brazil, a day of labor produces either 2 units of coffee or 1 unit of sugar. Which of the following statements is true?
a. Brazil has a comparative advantage in producing coffee. b. Brazil has a comparative advantage in producing both coffee and sugar. c. Chile has a comparative advantage in producing both coffee and sugar. d. Neither Chile nor Brazil has a comparative advantage in producing coffee. e. Brazil has a comparative advantage in producing sugar.
If a person chooses self-sufficiency, then she can only consume what she produces
a. True b. False Indicate whether the statement is true or false