The position of a cartel will become weaker if there is ________ excess-capacity among the firms belonging to the cartel.
A)minimum
B)no
C)zero
D)high

Question

Quizplus · Accepted Answer

If there is high excess-capacity among the firms belonging to the cartel, it means that each firm is producing much more than what is demanded in the market. This leads to a situation where the firms engage in price competition, leading to a weaker position of the cartel. Therefore, high excess-capacity weakens the position of the cartel.

The Position of a Cartel Will Become Weaker If There