One reason cartels have limited power is that demand curves become:
A) less elastic over time.
B) more elastic over time.
C) fragmented over time.
D) stable once the cartel is established.

Question

Quizplus · Accepted Answer

When a cartel raises prices, it incentivizes new suppliers to enter the market and existing suppliers to increase production, resulting in a more competitive market with more substitutes. As a result, demand curves become more elastic over time, limiting the cartel's power.

One Reason Cartels Have Limited Power Is That Demand Curves