If the bauxite exporting countries form a cartel to boost the price of bauxite so as to increase sales revenue,they believe that the demand for bauxite:
A) Is inelastic with respect to price changes
B) Is elastic with respect to price changes
C) Will increase in response to a price increase
D) Will not change in response to a price change

Question

Quizplus · Accepted Answer

If the bauxite exporting countries believe that forming a cartel will increase sales revenue by boosting the price of bauxite, it suggests that they believe the demand for bauxite is inelastic with respect to price changes. This means that buyers will continue to purchase bauxite at higher prices, resulting in an overall increase in revenue for the exporting countries. If the demand for bauxite were elastic, buyers would be more likely to seek out alternative sources or substitutes if prices increased, resulting in a decrease in demand and potentially lower overall revenue for the exporting countries.

If the Bauxite Exporting Countries Form a Cartel to Boost