<u>A cartel differs from a monopoly in that by businesses making the same product agree to limit production.
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Further Explanation:
Cartel: It is an association formed by manufacturer, supplier, or both to limit production level, to fix prices, or to share customers or markets among themselves.
Monopoly: It is a market structure characterized by one producer selling a unique product. There are barriers to exit and entry. The firm in the monopoly is price maker, not the price taker.
Justification for the correct and incorrect answer:
a.
One corporation has complete control of a product or service: This option is incorrect.
In the case of monopoly, there is a single producer who has control over services or product. In the case of a cartel, there are many producers who form an association to limit the supply or to fix the prices.
b.
Businesses making the same product agree to limit production: This option is correct.
In the case of a monopoly, there is only a single producer who sells unique services or products. In the case of the cartel, there are many producers who are selling the same product agree to form an association to limit the supply or to fix the prices.
c.
One firm sets the prices for all goods in the industry: This option is incorrect.
The one firm setting the price for product or service is a characteristic of the monopoly, but the cartel is characterized by many firms that agree to set the price.
d.
All the firms involved in the same business merge into one entity: This option is incorrect.
The monopoly is characterized by a single producer, so it cannot merge with other business and cartel is an association of producer, supplier, or both.
Learn more:
1. Demand and type of goods
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2. Demand and supply of goods
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3. Elasticity of demand
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Answer details:
Grade: High School
Subject: Economics
Chapter: Types of markets
Keywords: A cartel, a monopoly, agree to limit production, control of a product or service, set the prices for all goods, same business merge into one entity, all the firms involved in, business making the same product, merge into one entity, one firm sets the prices, all goods in a n industry.
