In general, an organization of sellers designed to coordinate supply decisions so that the joint profits of the members is maximized is called a(n) ____. If they are successful, the total market output and price will most closely approximate the output and price in a(n) ____ market. (Fill in the blanks.)

Question

Quizplus · Accepted Answer

A cartel is an organization of sellers that aims to maximize joint profits by coordinating supply decisions. If they are successful, the total market output and price will most closely approximate the output and price in a monopoly market, where there is only one seller. Therefore, the second blank is best filled with "monopoly". Choice A is incorrect because a cooperative is a business owned and operated for the benefit of its members, not necessarily for maximizing joint profits. Choice C is partially correct in that a cartel aims to coordinate supply decisions, but an open price-taker market refers to a market where no individual buyer or seller can affect price, which is not necessarily the case when a cartel successfully sets prices. Choice D is incorrect because OPEC refers specifically to the cartel of oil-producing nations and does not provide a general term for all cartels.

In General, an Organization of Sellers Designed to Coordinate Supply