Question

Cartels control the production and pricing of goods mainly through A) the elimination of competition. B) the cooperation of their members. C) the limitation of price controls. D) the manipulation of government pressure.

Answer 1

Answer: Cartels control the production and pricing of goods mainly through A. The elimination of competition.

Explanation: A cartel is a group of manufacturers and suppliers that keep their prices set at high levels to restrict competition. By keeping their prices set so high, it is hard for others to compete to sell the same products as those within the association.

Answer 2

The right answer is B "The cooperation of the members”

A cartel happens when a group of producers that have the same good, in order to protect their interest, fix prices for them so the price competition is avoided. This is very important in oligopolistic markets, in which there are just a few producers. Cartels are very attractive because by setting rules, they reduce the risks.