A Reason Why It Is Difficult for Developing Countries to Maintain

question 21

Multiple Choice

A reason why it is difficult for developing countries to maintain a cartel is that

• A) the elasticity of demand for a cartel's output decreases over time.
• B) producers in the cartel have an economic incentive to cheat.
• C) economic profits discourage other producers from entering the industry.
• D) producers in the cartel have the motivation to lower prices but not to raise prices.
• E) tariffs allow producers in the cartel to produce items that make no profit.

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Definitions:

Osmosis

The movement of water through a semipermeable membrane from an area of low solute concentration to an area of high solute concentration.

Distillation

A process of purifying liquids through heating and cooling, separating components based on differences in boiling points.

Flooding

An overflow of water onto land that is normally dry, often the result of heavy rain, snowmelt, or obstruction of water flow.

Channelization

The engineering of a natural stream or river by straightening, deepening, or otherwise modifying its natural course for navigation, flood control, or urban development.