True or False: Based on the fact that both Gregor and Haidy increased production from the initial cartel quantity, you know that the output effect was larger than the price effect at that quantity. True False

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1. At the cartel quantity, each member considers increasing production by weighing two effects:  
   - The $$\textbf{output effect}$$, which is the extra profit from selling an additional unit at the cartel price, and  
   - The $$\textbf{price effect}$$, which is the loss on all units sold due to the drop in price when total market output increases.

2. If an individual increases output, the marginal gain is positive only when the output effect exceeds the price effect. That is, for a deviation to be profitable, we must have:  
   $$
   \text{Output Effect} > \text{Price Effect}
   $$

3. The fact that both Gregor and Haidy chose to increase their production from the cartel quantity indicates that for them, the net benefit was positive. This implies that at the original cartel quantity, for each of them, the output effect was larger than the price effect.

4. Hence, the statement is $$\textbf{True}$$.
True

True or False: Based on the fact that both Gregor and Haidy increased production from the initial cartel quantity, you know that the output effect was larger than the price effect at that quantity. True False

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