You read that 40 firms that grow and export strawberries to the United States decide to form a cartel. The cartel aims to raise the price of strawberries and reduce output to increase profits for the strawberry growers. You predict that this cartel will probably
A) not be successful because there are too many firms that are trying to organize the cartel and there are a number of good substitutes for strawberries.
B) not be successful because it is difficult to export a perishable product like strawberries.
C) be successful because the demand for strawberries is very inelastic.
D) be successful because enforcing the rules among only 40 firms is very manageable.

Question

Quizplus · Accepted Answer

Cartels in markets with many firms and available substitutes often struggle to maintain discipline and control over the market, as individual firms have incentives to cheat for additional profits, and consumers can switch to other products.

You Read That 40 Firms That Grow and Export Strawberries