Which would make it easier to maintain an effective collusive agreement in a cartel?
A) the emergence of a number of potential entrant firms
B) a decrease in the elasticity of demand for the cartel's product
C) an increase in the number of substitutes for products produced by the cartel
D) a new method of pricing that makes it more difficult for firms in the cartel to determine the prices at which other cartel members are selling their product

Question

Quizplus · Accepted Answer

A decrease in the elasticity of demand for the cartel's product would make it easier to maintain a collusive agreement because it indicates that consumers are less likely to switch to substitutes, giving the cartel more market power and less pressure to compete on price.

Which Would Make It Easier to Maintain an Effective Collusive