When tacit cooperation has the effect of reducing supply and increasing prices, it is known as
A) monopolistic competition.
B) explicit collusion.
C) competitive parity.
D) tacit collusion.

Question

Quizplus · Accepted Answer

Tacit collusion refers to an unspoken understanding between firms to limit competition by reducing output and/or raising prices. This can lead to higher prices for consumers and reduced market efficiency. Monopolistic competition refers to a market with many competing firms, while explicit collusion involves firms explicitly agreeing to limit competition, such as through price fixing. Competitive parity refers to a state in which firms are evenly matched in terms of market share and competitive position.

When Tacit Cooperation Has the Effect of Reducing Supply and Increasing