To be considered a a good candidate for an export cartel, a commodity should ?
Correct answer: D. have a low price elasticity of demand
- A. be a manufactured goods
- B. be a primary product
- C. have high price elasticity of supply
- D. have a low price elasticity of demand
Explanation
An export cartel is more effective when foreign buyers cannot easily reduce their purchases after a price increase, meaning demand is price inelastic. High supply elasticity would instead make cartel control more difficult by encouraging expanded output.
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About Microeconomics
Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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