What traits qualify a commodity as a strong candidate for an export cartel ?
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Answer: D. have a low price elasticity of demand
Explanation
Export cartels succeed best when demand for the underlying commodity is price inelastic. Inelastic demand means price increases do not trigger large drops in consumer purchases. Cartel members can raise prices and boost total revenue without losing significant sales volume. A cartel is an association of producers designed to coordinate prices and output levels. Price elasticity of demand measures how consumer quantity demanded responds to price changes. Primary commodities often feature fewer close substitutes, making their demand relatively inelastic.
OPEC successfully influenced global petroleum markets for decades by leveraging inelastic energy demand. International commodity agreements attempt to stabilize export earnings through coordinated supply management. High price elasticity would cause consumers to abandon cartelized goods for cheaper alternatives quickly. Manufactured goods usually have many substitutes, making them poor candidates for export cartels. Primary products can form cartels only if demand remains inelastic rather than broadly elastic. High price elasticity of supply would encourage outside producers to flood the market instantly.
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