To be considered a good candidate for export cartel, a commodity should ?
Correct answer: C. have a low price elasticity of supply
- A. be a manufactured good
- B. be a primary product
- C. have a low price elasticity of supply
- D. have a high price elasticity of demand
Explanation
A commodity with relatively inelastic supply is easier for an export cartel to control because member producers cannot quickly expand output when prices rise. High demand elasticity would weaken a cartel by causing buyers to reduce purchases sharply after a price increase.
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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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