ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Either A or B
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None of the above
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Detailed explanation-1: -When firms act together in this way to reduce output and keep prices high, it is called collusion. A group of firms that have a formal agreement to collude to produce the monopoly output and sell at the monopoly price is called a cartel.
Detailed explanation-2: -A cartel is a group of suppliers that colludes to operate like a monopolist. The cartel formed by the members of the Organization of Oil Exporting Countries (OPEC) is an example of a cartel that was successful in achieving its objectives for a long period.
Detailed explanation-3: -A cartel is a form of collusion between suppliers. A cartel occurs when two or more firms (usually within an oligopoly) enter into agreements to restrict the market supply and thereby fix the price of a product in a particular industry.
Detailed explanation-4: -Answer and Explanation: C) Cartels collude to raise prices and profits is generally true of cartels.
Detailed explanation-5: -A group of independent producers whose intention is to increase their collective profit by various restricting practices such as price fixing, limiting supply, etc. is called as the Cartel.