Asked by JONATHAN MORENO on May 14, 2024
Verified
We would expect a cartel to achieve
A) both allocative efficiency and productive efficiency.
B) allocative efficiency but not productive efficiency.
C) productive efficiency but not allocative efficiency.
D) neither allocative efficiency nor productive efficiency.
Cartel
An association of independent companies or entities that agree to limit competition between themselves, often to control prices and production in a particular market.
Allocative Efficiency
A state of the economy in which the distribution of resources among different uses is optimal, reflecting consumer preferences and maximizing total societal welfare.
Productive Efficiency
A situation in which a goods or services are produced at the lowest possible cost, utilizing all available resources efficiently.
- Acquire knowledge of allocative and productive efficiency within various market configurations.
Verified Answer
SH
Sheridan HarrisMay 15, 2024
Final Answer :
D
Explanation :
Cartels typically restrict output to raise prices above competitive levels, leading to neither allocative efficiency (where resources are allocated to their most valued uses) nor productive efficiency (where goods are produced at the lowest possible cost).
Learning Objectives
- Acquire knowledge of allocative and productive efficiency within various market configurations.