Fat's Meats is part of a cartel that controls the kielbasa industry. Which of the following would cause instability in this cartel? a) The demand for kielbasa decreases. b) The cost of producing kielbasa increases. c) More firms could enter the industry. d) Nonprice competition is nonexistent.

Question

Business

August Herrera

10 August, 18:41

Fat's Meats is part of a cartel that controls the kielbasa industry. Which of the following would cause instability in this cartel? a) The demand for kielbasa decreases. b) The cost of producing kielbasa increases. c) More firms could enter the industry. d) Nonprice competition is nonexistent.

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Answers (1)

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Raquel Schmidt · Answer 1

The correct answer is C: More firms could enter the industry

Explanation:

Fat's Meats control the Kielbasa industry and hence they would feel they are stable. A decrease in the demand would not bring instability as they would still be in control. Increase in cost will also not cause instability because they would increase their price and since they control the industry, customers will have no choice than to buy. The existence of non-price competition would have made them unstable, but since there is no non-price competition. However the entrance of more firms into the industry would definitely destabilize Fat's Meat because an organization can come with more influence, money, and better product and become the leader in the industry.