Activity: Cartels and Competition

Video Demonstration:

Concepts:

• Incentives matter
• Increases in supply lead to reductions in price
• Cartels increase their profits and market prices by restricting production
• Desire for profit undermines cartel agreements

Materials:

(See activity guide under support materials for all handouts, procedures, and visuals.)

• Balance Sheet – 1 per team
• Production Decision Cards – 25 to 30 cards per game
• Production Decision Worksheet – 1 per student
• Demand Forecast (overhead transparency)
• Market Demand (actual) (overhead transparencies)
• Production Record (1 overhead transparency)
• Prizes for companies making more than $300
• Grand prize for most profit