You Read That 40 Firms That Grow and Export Strawberries

question 205

Multiple Choice

You read that 40 firms that grow and export strawberries to the United States decide to form a cartel. The cartel aims to raise the price of strawberries and reduce output to increase profits for the strawberry growers. You predict that this cartel will probably

• A) not be successful because there are too many firms that are trying to organize the cartel and there are a number of good substitutes for strawberries.
• B) not be successful because it is difficult to export a perishable product like strawberries.
• C) be successful because the demand for strawberries is very inelastic.
• D) be successful because enforcing the rules among only 40 firms is very manageable.

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Definitions:

Interest Rate

The cost of borrowing money or the return earned on investments, typically expressed as a percentage of the principal amount.

Stock Price

The cost of purchasing a share of a company in the stock market, reflective of the company's perceived value by investors.

Matrix Limitation

Constraints or restrictions related to the size, complexity, or operations of a matrix in mathematical or computational contexts.

Series Contacts

Electrical contacts connected in a sequence where the current must flow through all contacts in order, used in circuits and safety systems.