Help..PLz!!?
a - they work only if members keep to their agreed uotput.
b - they are illegal worldwide.
c - firms in a cartel are likely to lose money.
d - the products are perfectly competitive.
2 - A law that is designed to prevent one company from controlling a market is:
a - anti-cometitive.
b - what every business wishes to get away with.
c - an antitrust law.
d - not enforced by the US Government because it is almost impossible to prove in court.
3 - When the goverment deregulates a product or service:
a - the product or service becomes available to more people.
b - the product or service becomes cheaper.
c - some government regulations over the industry are eliminated.
d - government control over the industry is stopped.
Thank you!
Answer:
1 - a.
Cartels create an interesting situation where perfect competition is essentially stifled and an industry produces and sells a product at the monopoly quantity and prices. However, this means that each colluding competitor has an incentive to lower their individual price a little bit and steal most or all of the market share and still make a much better profit than in the competitive market. If each member of a cartel does that, then the cartel fails, as the members keep undercutting each other until they reach the competitive equilibrium.
2 - c.
Antitrust laws are laws designed to prevent monopolies or cartels. In modern business, while cartels might be easy to find (if cartels are solidly founded to avoid the above situation, it's easier to find some sort of paper trail, for example), monopolies can be not only vague and difficult to define but also incomplete or partial.
3 - c.
This is a tricky one, in the way that it's worded, but the best answer is c. I would actually prefer to put "all government regulations are stopped" instead of "some," but c still remains true and the best answer. Answers a and b are generally (but perhaps not always) consequences of c, and d. sounds good except I don't like the term "government control." The government does not "control" industries it regulates, it simply mandates price caps/floors or production techniques or pollution requirements etc.
1.a. The main problem is that every member has an incentive to "cheat" and sell more goods than the agreed upon amount.
2.c. Anti-trust laws prevent domination of a market by one or a few firms.
3.c. Deregulations is what is sound like... the dismantling of some (but rarely all) regulations.
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