A major reason that firms form a cartel is to (Points : 4) reduce the elasticity of demand for the product. enlarge the market s

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professor190 [17]

9 months ago

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A major reason that firms form a cartel is to (Points : 4) reduce the elasticity of demand for the product. enlarge the market s

hare for each producer. minimize the costs of production. maximize joint profits.

Social Studies

1 answer:

dalvyx [7] · Answer 1 · 2024-08-14T11:10:14+03:00

The major reason that firms form a cartel is to maximize joint profits. The Option D is correct.

<h3>What is a cartel?</h3>

A cartel refers to the association of independent firms or individuals for the purpose of exerting some form of restrictive or monopolistic influence on the production or sale of a commodity. The most common arrangements of cartel are aimed at regulating prices or output or dividing up markets.

According to economist, the main justification for the establishment of cartels is for the protection from ruinous competition, which, it is alleged, causes the entire industry’s profits to be too low.

A cartelization provide for distributing fair shares of the total market among all competing firms and the most common practices employed by cartels in maintaining their industry’s monopoly position including the fixing of prices, the allocation of sales quotas or exclusive sales territories.