Which of the following is true regarding a collusive agreement?
I. It is illegal in Australia.
II. Two or more producers agree to restrict output or raise prices.
III. Firms' profits are never maximised under this sort of agreement.
A) I and II
B) I and III
C) II and III
D) I, II and III

Question

Quizplus · Accepted Answer

Collusive agreements, where two or more producers agree to restrict output or raise prices, are illegal in many jurisdictions, including Australia, as they are anti-competitive and violate antitrust laws. While such agreements aim to increase the firms' profits by reducing competition, it is not accurate to say that firms' profits are never maximised under this sort of agreement; in some cases, firms may indeed achieve higher profits through collusion, at least in the short term.

Which of the Following Is True Regarding a Collusive Agreement