True or false?
The correct answer is false. If the combine or cartel wants to maximize its profits from collusion it will set the output level and the price of the product so as to equate its marginal revenue with its marginal cost. The cartel's marginal revenue will, of course, be below the social marginal revenue, and its marginal cost will be the social marginal cost. While profit maximization on the part of the colluders thus results in a price above the competitive free market level, there will be an upper bound to the price that will be charged. It would not be in the cartel's interest to charge more than the profit maximizing price.