Choose ALL correct answers:Which of the followings is/are an example(s) of a cartel?Group of answer choicesPepsi decides to increase its quantity to earn a higher profit after observing a low quantity supplied by Coke.Coke and Pepsi both charge a low price for their soft drinks as they try to maximise their profit.Coke and Pepsi agree to charge a high price for their soft drinks to earn higher profits.Coke decides to lower its price to get more market share after observing a high price charged by Pepsi.Coke and Pepsi decide to restrict their supplies together to earn higher profits.
Question
Choose ALL correct answers:Which of the followings is/are an example(s) of a cartel?Group of answer choicesPepsi decides to increase its quantity to earn a higher profit after observing a low quantity supplied by Coke.Coke and Pepsi both charge a low price for their soft drinks as they try to maximise their profit.Coke and Pepsi agree to charge a high price for their soft drinks to earn higher profits.Coke decides to lower its price to get more market share after observing a high price charged by Pepsi.Coke and Pepsi decide to restrict their supplies together to earn higher profits.
Solution
A cartel is a group of independent market participants who collude with each other in order to improve their profits and maintain control over the market. They do this by coordinating their actions, such as setting high prices or limiting supply.
From the given options:
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Pepsi decides to increase its quantity to earn a higher profit after observing a low quantity supplied by Coke. - This is not an example of a cartel. This is an example of a competitive behavior.
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Coke and Pepsi both charge a low price for their soft drinks as they try to maximise their profit. - This is not an example of a cartel. This is an example of competition, not collusion.
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Coke and Pepsi agree to charge a high price for their soft drinks to earn higher profits. - This is an example of a cartel. The two companies are colluding to set high prices.
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Coke decides to lower its price to get more market share after observing a high price charged by Pepsi. - This is not an example of a cartel. This is an example of competitive behavior.
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Coke and Pepsi decide to restrict their supplies together to earn higher profits. - This is an example of a cartel. The two companies are colluding to restrict supply and increase prices.
So, the correct answers are: "Coke and Pepsi agree to charge a high price for their soft drinks to earn higher profits" and "Coke and Pepsi decide to restrict their supplies together to earn higher profits".
Similar Questions
Choose ALL correct answers:Which of the followings is/are an example(s) of a tacitly collusive agreement?Group of answer choicesCoke and Pepsi decide to restrict their supplies together to earn higher profits.Coke decides to lower its price to get more market share after observing a high price charged by Pepsi.Pepsi decides to increase its quantity to earn a higher profit after observing a low quantity supplied by Coke.Coke and Pepsi both charge a low price for their soft drinks as they try to maximise their profit.Coke and Pepsi agree to charge a high price for their soft drinks to earn higher profits.
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