All of the following are preconditions for economic growth EXCEPT ...

[wenmo]

All of the following are preconditions for economic growth EXCEPT i. property rights. ii. democracy. iii. free markets.
 
  A) i only
  B) ii only
  C) iii only
  D) Both i and ii
  E) i, ii, and iii

Question 2

Explain what a cartel is and the difficulties faced in maintaining a cartel.
 
  What will be an ideal response?

[prumorgan]

Answer to Question 1

B

Answer to Question 2

A cartel is a group of firms acting together to decrease output, raise price, and increase economic profit. The difficulty faced by a cartel is the fact that each member has the incentive to cheat on the cartel and increase its output. If a member increases its output and the rest of the cartel members do not, the cheating member's profits will increase substantially. Each member reasons that if it is the only cheater, it can significantly increase its profit and so each firm has an incentive to cheat.