The reason due to which cartels are unstable.

Question

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Answer 1

Question

Chapter 16, Problem 1DQ

To determine

The reason due to which cartels are unstable.

Expert Solution & Answer

Explanation of Solution

The reasons for the instability of cartels are as follows:

The members of cartels must have a major share in the market so that other producers do not suppress the decision taken by the cartels by expanding its production.

The good that is a substitute of another good provided by the cartel must be of low quality and there must be a few numbers of substitutes available in the market.

There must be solidarity among the members so that cheaters could be identified and punished.

There must be very few external factors that can make the cartel unstable.

However, the cartel members have a reason to deviate, in order to earn more profit. Cartel members cheat and decrease the price of goods to sell more quantity of outputs. Hence, the cartel needs a great deal of mutual cooperation to be stable.

Economics Concept Introduction

Concept introduction:

Cartel:

A cartel is a group formed by mutual cooperation. In an oligopoly market, many firms collaborate mutually to have control over market prices and supply of a good. OPEC is one of the known cartels in the oil production sector.

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Answer 2

Question

Chapter 16, Problem 1DQ

To determine

The reason due to which cartels are unstable.

Expert Solution & Answer

Explanation of Solution

The reasons for the instability of cartels are as follows:

The members of cartels must have a major share in the market so that other producers do not suppress the decision taken by the cartels by expanding its production.

The good that is a substitute of another good provided by the cartel must be of low quality and there must be a few numbers of substitutes available in the market.

There must be solidarity among the members so that cheaters could be identified and punished.

There must be very few external factors that can make the cartel unstable.

However, the cartel members have a reason to deviate, in order to earn more profit. Cartel members cheat and decrease the price of goods to sell more quantity of outputs. Hence, the cartel needs a great deal of mutual cooperation to be stable.

Economics Concept Introduction

Concept introduction:

Cartel:

A cartel is a group formed by mutual cooperation. In an oligopoly market, many firms collaborate mutually to have control over market prices and supply of a good. OPEC is one of the known cartels in the oil production sector.

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Answer 3

Question

Chapter 16, Problem 1DQ

To determine

The reason due to which cartels are unstable.

Expert Solution & Answer

Explanation of Solution

The reasons for the instability of cartels are as follows:

The members of cartels must have a major share in the market so that other producers do not suppress the decision taken by the cartels by expanding its production.

The good that is a substitute of another good provided by the cartel must be of low quality and there must be a few numbers of substitutes available in the market.

There must be solidarity among the members so that cheaters could be identified and punished.

There must be very few external factors that can make the cartel unstable.

However, the cartel members have a reason to deviate, in order to earn more profit. Cartel members cheat and decrease the price of goods to sell more quantity of outputs. Hence, the cartel needs a great deal of mutual cooperation to be stable.

Economics Concept Introduction

Concept introduction:

Cartel:

A cartel is a group formed by mutual cooperation. In an oligopoly market, many firms collaborate mutually to have control over market prices and supply of a good. OPEC is one of the known cartels in the oil production sector.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 16, Problem 1DQ

To determine

The reason due to which cartels are unstable.

Expert Solution & Answer

Explanation of Solution

The reasons for the instability of cartels are as follows:

The members of cartels must have a major share in the market so that other producers do not suppress the decision taken by the cartels by expanding its production.

The good that is a substitute of another good provided by the cartel must be of low quality and there must be a few numbers of substitutes available in the market.

There must be solidarity among the members so that cheaters could be identified and punished.

There must be very few external factors that can make the cartel unstable.

However, the cartel members have a reason to deviate, in order to earn more profit. Cartel members cheat and decrease the price of goods to sell more quantity of outputs. Hence, the cartel needs a great deal of mutual cooperation to be stable.

Economics Concept Introduction

Concept introduction:

Cartel:

A cartel is a group formed by mutual cooperation. In an oligopoly market, many firms collaborate mutually to have control over market prices and supply of a good. OPEC is one of the known cartels in the oil production sector.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 16, Problem 1DQ

To determine

The reason due to which cartels are unstable.

Expert Solution & Answer

Explanation of Solution

The reasons for the instability of cartels are as follows:

The members of cartels must have a major share in the market so that other producers do not suppress the decision taken by the cartels by expanding its production.

The good that is a substitute of another good provided by the cartel must be of low quality and there must be a few numbers of substitutes available in the market.

There must be solidarity among the members so that cheaters could be identified and punished.

There must be very few external factors that can make the cartel unstable.

However, the cartel members have a reason to deviate, in order to earn more profit. Cartel members cheat and decrease the price of goods to sell more quantity of outputs. Hence, the cartel needs a great deal of mutual cooperation to be stable.

Economics Concept Introduction

Concept introduction:

Cartel:

A cartel is a group formed by mutual cooperation. In an oligopoly market, many firms collaborate mutually to have control over market prices and supply of a good. OPEC is one of the known cartels in the oil production sector.

Answer 6

Chapter 16, Problem 1DQ

To determine

The reason due to which cartels are unstable.

Expert Solution & Answer

Explanation of Solution

The reasons for the instability of cartels are as follows:

The members of cartels must have a major share in the market so that other producers do not suppress the decision taken by the cartels by expanding its production.

The good that is a substitute of another good provided by the cartel must be of low quality and there must be a few numbers of substitutes available in the market.

There must be solidarity among the members so that cheaters could be identified and punished.

There must be very few external factors that can make the cartel unstable.

However, the cartel members have a reason to deviate, in order to earn more profit. Cartel members cheat and decrease the price of goods to sell more quantity of outputs. Hence, the cartel needs a great deal of mutual cooperation to be stable.

Economics Concept Introduction

Concept introduction:

Cartel:

A cartel is a group formed by mutual cooperation. In an oligopoly market, many firms collaborate mutually to have control over market prices and supply of a good. OPEC is one of the known cartels in the oil production sector.

Answer 7

Chapter 16, Problem 1DQ

To determine

The reason due to which cartels are unstable.

Answer 8

Expert Solution & Answer

Explanation of Solution

The reasons for the instability of cartels are as follows:

The members of cartels must have a major share in the market so that other producers do not suppress the decision taken by the cartels by expanding its production.

The good that is a substitute of another good provided by the cartel must be of low quality and there must be a few numbers of substitutes available in the market.

There must be solidarity among the members so that cheaters could be identified and punished.

There must be very few external factors that can make the cartel unstable.

However, the cartel members have a reason to deviate, in order to earn more profit. Cartel members cheat and decrease the price of goods to sell more quantity of outputs. Hence, the cartel needs a great deal of mutual cooperation to be stable.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Concept introduction:

Cartel:

A cartel is a group formed by mutual cooperation. In an oligopoly market, many firms collaborate mutually to have control over market prices and supply of a good. OPEC is one of the known cartels in the oil production sector.

Answer 12

Ch. 16 - Prob. 1DQ Ch. 16 - Prob. 2DQ Ch. 16 - Prob. 3DQ Ch. 16 - Prob. 4DQ Ch. 16 - Prob. 5DQ Ch. 16 - Prob. 6DQ

The reason due to which cartels are unstable.

The reason due to which cartels are unstable.

Explanation of Solution

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Chapter 16 Solutions