Question 50
Market StructuresAn important feature of a cartel is that
- A.members do not reduce price below the cartel price
- B.each member has a fixed output above which it is not expected to produce
- C.a powerful member fixes the price at which others will sell
- D.members fix the prices for their products.
Show the answer and explanation
Answer: B (each member has a fixed output above which it is not expected to produce)
Explanation
A cartel controls the market by giving each member an output quota that it should not exceed.