1. Several questions in this problem set are based on the 8/19/12 Wall Street Jo
ID: 1216537 • Letter: 1
Question
1.
Several questions in this problem set are based on the 8/19/12 Wall Street Journal article "Cartel Pushes Up Price of Rubber." This article is at the end of the module on Antitrust Policy. Try to read the entire article carefully first... and then see if you can answer the questions (rather than fishing out the answer each time). Obviously you will go back and check to make sure you have it correct ... but to absorb the content it is best read it all first before going back.
What challenges (mentioned in the article) does the cartel face as they try to raise prices?
All of the above are mentioned
2.
Several questions in this problem set are based on the 8/19/12 Wall Street Journal article "Cartel Pushes Up Price of Rubber." This article is at the end of the module on Antitrust Policy. Try to read the entire article carefully first... and then see if you can answer the questions (rather than fishing out the answer each time). Obviously you will go back and check to make sure you have it correct ... but to absorb the content it is best read it all first before going back.
Why is a rubber cartel feasible (according to what is mentioned in the article)?
Economies of scale are large - resulting in the need for large-scale production and rubber only grows in the tropics
3.
Several questions in this problem set are based on the 8/19/12 Wall Street Journal article "Cartel Pushes Up Price of Rubber." This article is at the end of the module on Antitrust Policy. Try to read the entire article carefully first... and then see if you can answer the questions (rather than fishing out the answer each time). Obviously you will go back and check to make sure you have it correct ... but to absorb the content it is best read it all first before going back.
In what ways is TopGlove responding?
Keeping prices constant (which means lower profits) so as to not lose consumers
4.
A. Cheating, competition from non-members, substitution away from rubber B. US may penalize the cartel by implementing a quota C. The WTO is investigating and may find the practice illegal - leading to penalties to be placed on the governments of the members. D.All of the above are mentioned
2.
Several questions in this problem set are based on the 8/19/12 Wall Street Journal article "Cartel Pushes Up Price of Rubber." This article is at the end of the module on Antitrust Policy. Try to read the entire article carefully first... and then see if you can answer the questions (rather than fishing out the answer each time). Obviously you will go back and check to make sure you have it correct ... but to absorb the content it is best read it all first before going back.
Why is a rubber cartel feasible (according to what is mentioned in the article)?
Economies of scale are large - resulting in the need for large-scale production and rubber only grows in the tropics
3.
Several questions in this problem set are based on the 8/19/12 Wall Street Journal article "Cartel Pushes Up Price of Rubber." This article is at the end of the module on Antitrust Policy. Try to read the entire article carefully first... and then see if you can answer the questions (rather than fishing out the answer each time). Obviously you will go back and check to make sure you have it correct ... but to absorb the content it is best read it all first before going back.
In what ways is TopGlove responding?
A. Raising prices to consumers and investing in its own rubber plantation B. Stopping production of rubber-based products and diversifying into plastics. C. They are on the verge of bankruptcy and are looking for buyers. D.Keeping prices constant (which means lower profits) so as to not lose consumers
4.
Explanation / Answer
a. As mentioned in the article, Cheating, competition from non-members, substitution away from rubber.
b. All of the answers are correct.
c. Raising prices to consumers and investing in its own rubber plantation. The company is passing price increase to consumers and investing in its own rubber plantation.
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