Which of the Following Situations Reduces the Likelihood of Successful

question 35

Multiple Choice

Which of the following situations reduces the likelihood of successful operation of a cartel?

• A) Cartel sales experience a rapid expansion.
• B) The demand for cartel output is price inelastic.
• C) The number of firms in the cartel is large.
• D) It is very difficult for new firms to enter the market.

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Definitions:

Deadweight Loss

A loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable.

Excise Tax

A tax imposed on specific goods, services, or transactions, often included in the price of the product, like alcohol, tobacco, and gasoline.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium outcome is not achievable due to market failure or interventions.

Elasticity

A measure of how much the quantity demanded or supplied of a good responds to changes in price, income, or other factors.