The Authors Explain That the International Copper Cartel (CIPEC) Has

question 38

Multiple Choice

The authors explain that the international copper cartel (CIPEC) has been largely ineffective in raising the price of copper in world markets, and the reason is mainly due to the relatively elastic demand for copper. Suppose the cartel recognized that there are multiple uses for copper, and some of the uses have few substitute products (e.g., copper electrical wire) while others have several close substitutes (e.g., copper water pipes) . To increase profits, the cartel could raise the price of copper in the sub-markets with relatively inelastic demand. What else would the cartel have to do in order to make the cartel's action effective?

• A) The cartel would have to seek permission from the U.S. Department of Justice.
• B) The cartel would have to get the cooperation of all other copper producers in order to raise the price by some positive amount.
• C) The cartel would have to find a way to keep the buyers in the low-price market from reselling the copper to buyers in the high-price market.
• D) none of the above

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Definitions:

Marketable Securities

Financial instruments that are easily convertible into cash, such as stocks and bonds.

Inventory Turnover Ratio

A measure of how many times a company's inventory is sold and replaced over a specific period, indicating the efficiency of inventory management.

Quantity Discounts

Price reductions given to customers purchasing large volumes.

Inventory Turnover

A financial ratio indicating how often a company's inventory is sold and replaced over a specific period.