In which of the following circumstances would a cartel be most likely to work ?
Correct answer: A. The market for copper, where there are very few producers and the product is standardized.
- A. The market for copper, where there are very few producers and the product is standardized.
- B. The fast-food market where there are a large number of producers but the demand for fast food is inelastic
- C. The coffee market where the product is standardized and there are a large number of coffee growers.
- D. The automobile industry, where there are few producers but there is great product differentiation.
Explanation
Cartels are easiest to organize when there are few producers and the product is standardized, because cheating is easier to detect and members have similar interests. The copper market in option a fits both conditions.
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