The steel producers in a country belong to a cartel. Each producer is given a production quota, and at first each one makes the highest amount permitted by that quota. What effect would allowing the producers to trade quotas with one another have on total steel production and on the industry’s total profits?
- Aeffect on production: increase; effect on total profits: increase
- Beffect on production: increase; effect on total profits: no change
- Ceffect on production: no change; effect on total profits: increase
- Deffect on production: no change; effect on total profits: no change