Coffee Case Study Example | Topics and Well Written Essays - 1250 words

Coffee - Case Study ExampleThe quantity of output that is belike to be produced in a cartel depends on the strength and stability of the cartel. For instance, if the cartel decides to act as a monopoly then it has absolute authority over either its members. The following graph shows the output and wrong in case of a cartel arrangement (Dwivedi, 2009).The summation of individual borderline embody curves provides the marginal cost curve for the industry as a whole and the intersection of the marginal revenue and cost curves determines the equilibrium level of output and price. Once the industry has been determined then the individual firms ascertains their own level of output by matching their own marginal cost curves to the profit-maximizing level.Cartels confuse been banned in a number of developed countries like the U.S.A. on account of the negative impacts it has on the consumers (Marshall and Marx, 2012). In more cases it has been observed that the cartel members hide price s, charge unreasonable price and artificially constrict output and all of these reduces the welfargon of the consumer. Consumers can also lose confidence in the business as cartels have been generally associated with the negative sentiments. In most of the cases the business enterprises which atomic number 18 not a part of the cartel are often eliminated from the business and this in turn affects the overall effectiveness of the economy as a whole. administration of cartels has been associated with the reduction of the innovation and economic efficiency. Governments and economists of various countries thinks that cartels are ineffective because unproductive members take refuge to the cartels and are not bothered to improve their performance (Grossman, 2004). It has also been found that cartel members often discourage the submission of new entrants into the market and this in turn restricts the chances of economic growth and job prospects for many. In many cases the cartels have been held responsible