High Prices Maintained by a Cartel Usually Make the Cartel

question 4

Multiple Choice

High prices maintained by a cartel usually make the cartel less successful because high price of the good:

• A) leads to more conservation.
• B) motivates demand to switch to substitutes of the goods.
• C) encourages a search for new supplies.
• D) All of the answers are correct.

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Definitions:

Sinking Fund Bonds

Bonds that include a provision for the issuer to create a fund for repaying the bond principal at or before maturity.

Term Bonds

Bonds that have a specific maturity date on which the principal is due to be paid to bondholders.

Trust Indenture

A trust indenture is a legal agreement in a bond contract that outlines the responsibilities of the bond issuer and the rights of the bondholders.

Unamortized Discount

The portion of a bond discount that has not yet been amortized (expensed) over the life of the bond.