Question

The incentive for a firm to join a cartel is

		to be able to earn profits in the long run but not in the short run.
		to be able to earn larger profits than if it was not part of the cartel.
		to completely insulate itself from competition.
		to produce a larger amount of output than if it was not part of the cartel.

Answer 1

The incentive for a firm to join a cartel is

B) to be able to earn larger profits than if it was not part of the cartel.
And c) to completely insulate itself from competition.

When a firm joins a cartel the idea is to charge higher prices than it could charge in a oligopoly market situation. When all firms join together and form a cartel the market behaves like a monopoly market giving the firms higher profits since there is no competition between firms. Forming a cartel is the most profit optimizing situation.