Question

Which of the following is not one of the conditions that make it more likely that firms will be able to coordinate their efforts to restrain output and detect​ cheating? A. Market demand tends to be volatile. B.A small number of firms in the industry. C.Prices are easily observable.Prices are easily observable. D.Firms in the industry produce nearly identical products.

Answer 1

The condition that make its difficult for firms to coordinate their efforts to control output quotas and pin point cheating is A) when market demand tends to be more volatile.

Step-by-step explanation:

All the options except A will make it difficult for firms to control output quotas and detect cheating. From reading the options B,C and D it is quite clear that in the market there is a presence of cartel ( which can be defined as a association of producers in an industry who comes together to set the prices and output quotas ) but even if there is presence of cartel in industry, the efforts to restrain output will fail if the demand of the products and services in volatile in the market, it would become difficult for them to pin point where the cheating has taken place.