A cartel will break down more easily ifA) there are only a few members. B) industry demand is very stable. C) market prices can be observed easily. D) there are many entrants in the industry.

Question

Business

Charlee Pratt

22 June, 11:23

A cartel will break down more easily ifA) there are only a few members. B) industry demand is very stable. C) market prices can be observed easily. D) there are many entrants in the industry.

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Answers (1)

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Koen Salazar · Answer 1

The correct answer to the following question is option D) when there are many entrants in the market.

Explanation:

A cartel can be defined as an organization which consists of group of manufacturers or suppliers who come together to serve their own benefit, by regulating the supply of products or by manipulating the product prices. A cartel would be powerful when there are high barriers to enter are very high, which means that there would be less competition and suppliers can manipulate the supply of products, which then would lead to increase in demand and ultimately they will set high prices, from which they will earn more profits. Therefore if the number of entrants in the market, then cartel won't be able to manipulate the supply or prices.