Developing Countries Have Often Attempted to Establish Cartels So as to Counter

question 25

Essay

Developing countries have often attempted to establish cartels so as to counter the actual or perceived inexorable downward push on the prices of their exported commodities.OPEC is the best well known of these.How are such cartels expected to help the developing countries? At times importing countries profess support for such schemes.Can you think of any logical basis for such support? How are cartels like monopolies,and how are they different from monopolies.Why is there a presupposition among economists that such schemes are not likely to succeed in the long run?

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Definitions:

Efficiently

Achieving maximum productivity with minimum wasted effort or expense.

Production Inefficiency

A situation where resources are not utilized in the best possible manner, resulting in wasted potential output.

Production Possibility Frontier

A graphical representation that shows the maximum combination of two goods or services that can be produced within a given time period, given available resources and technology.

Economic Growth

A growth in an economy's ability to generate goods and services when comparing two different time periods.