1  Why Oligopoly firms choose to form a cartel in the market? 2  A disadvantage of a fixed exchange rate system is:   A) Importers are insulated from the risk that the currency will appreciate over time

1 

Oligopoly firms join a cartel to increase market power and the members collude to decide on the level of output that every member will produce or agree on a fixed price the members in the cartel would charge.

The members choose a combined level of output such that their combined marginal cost is equal to their marginal revenue. This makes them more like a monopolist market firm. Unlike the perfectly competitive market, the cartel can set the market price above the the one in perfectly competitive markets.

A classic example of a cartel is OPEC, the member i.e. the countries in the organization decide on the future course of crude oil prices by setting the price/barrel either by reducing the combined output level to increase the price or increasing production to reduce the price when they stop colluding or agree on a fixed price to charge. OPEC countries from 2000-12 kept increasing the price it it reached $144/barrel. After the economic sanctions were lifted from Iran a non-OPEC oil producing country, the OPEC member stopped colluding and started increasing production to price levels as low as $20/barrel in 2015. Their motto wasn't to set a collective price but rather to drive market participants out who didn't enjoy low economies of scale.     

2 

Answer:

Explanation:

A fixed exchange rate system is called a pegged exchange rate system, the pegging being done by the respective governments. As the government is the deciding authority, any change made can affect either the importers or the exporters.