Which of the following is true regarding a collusive agreement? I. It is illegal in the United States.
II) Two or more producers agree to restrict output or raise prices.
III) Firms' profits are never maximized under this sort of agreement.

Question

Quizplus · Accepted Answer

A collusive agreement, also known as a cartel, is illegal in the United States and involves two or more producers agreeing to restrict output or raise prices. The goal of such an agreement is to increase profits, but it often results in consumer harm and a distortion of competition in the market. It is possible for firms to maximize profits under a collusive agreement, but only at the expense of consumers and other firms in the market.

Which of the Following Is True Regarding a Collusive Agreement