Refer to Figure 9-4. Suppose the government allows imports of leather footwear into the United States. What will be the quantity demanded?

Cartels are typically subject to cheating by their members because

A) if the other firms stick to the agreement, a firm can increase its profits by cutting its price. B) barriers to entry do not exist so new entrants will join. C) the U.S. Justice Department will punish any cartel agreement before the cartel has had a chance to operate. D) product differentiation allows the firms in the cartel to cheat.

If the fixed costs are relatively large, a relatively good approximation of the correct transfer price is

a. average costs b. average fixed costs c. average variable costs d. the market price