One factor that has prevented the formation of cartels for producers of commodities is that
A) the demand for commodities tends to be price inelastic.
B) substitute products exist for many commodities.
C) commodity produces have dominated world markets.
D) the production of most commodities is capital intensive.

Question

Quizplus · Accepted Answer

The existence of substitute products for many commodities makes it difficult for producers to form a cartel and control prices. If one group of producers raises prices too high, consumers will switch to substitute products, reducing demand for the cartel's goods. Additionally, there may be competition from alternative materials or technologies that can reduce demand for the commodity altogether. This competition prevents a small group of producers from controlling the market and maintaining high prices.

One Factor That Has Prevented the Formation of Cartels for Producers