When firms openly agree on price, output, and other decisions aimed at achieving monopoly profits, those firms are practicing:
A) overt collusion.
B) tacit collusion.
C) leadership price.
D) competitive game.

Question

Quizplus · Accepted Answer

Overt collusion refers to firms openly agreeing on decisions aimed at achieving monopoly profits, including price and output decisions. Tacit collusion, on the other hand, involves firms coordinating their behavior through unofficial means such as observing each other's actions and responding accordingly, rather than through explicit agreements. Leadership price refers to setting a price by a dominant firm in a market, which other firms then follow. Competitive game refers to the strategic interactions between firms in a competitive market. Therefore, the best choice in this case is A, as it accurately describes the behavior of firms openly agreeing on decisions aimed at achieving monopoly profits.

When Firms Openly Agree on Price, Output, and Other Decisions