Which of the following is NOT conducive to the successful operation of a cartel?
A) Market demand for the good is relatively inelastic.
B) The cartel supplies all of the world's output of the good.
C) Cartel members have substantial cost advantages over non-member producers.
D) The supply of non-cartel members is very price elastic.

Question

Quizplus · Accepted Answer

A cartel's success often relies on its ability to control prices and output levels. If the supply from non-cartel members is very price elastic, it means these producers can easily increase their supply in response to price increases by the cartel. This undermines the cartel's ability to maintain high prices, as the market can be supplied by non-cartel members who respond to the price increase by producing more.

Which of the Following Is NOT Conducive to the Successful