A reason why it is difficult for developing countries to maintain a cartel is that
A) the elasticity of demand for a cartel's output decreases over time.
B) producers in the cartel have an economic incentive to cheat.
C) economic profits discourage other producers from entering the industry.
D) producers in the cartel have the motivation to lower prices but not to raise prices.
E) tariffs allow producers in the cartel to produce items that make no profit.

Question

Quizplus · Accepted Answer

Developing countries often have weaker regulations and lower enforcement capabilities, making it easier for producers to cheat and sell more than their allotted quota, which undermines the cartel's power. Additionally, producers may have short-term profit incentives to cheat, which often outweigh long-term goals of maintaining the cartel.

A Reason Why It Is Difficult for Developing Countries to Maintain