When firms have agreements among themselves on the quantity to produce and the price at which to sell output,what is their form of organization called
A)a Nash arrangement
B)a cartel
C)a monopolistically competitive oligopoly
D)a perfectly competitive oligopoly

Question

Quizplus · Accepted Answer

When firms have agreements among themselves on the quantity to produce and the price at which to sell output, their form of organization is called a cartel. A cartel is a type of oligopoly where firms collude to maximize joint profits by restricting output and raising prices. Therefore, the correct option is B, a cartel. The other options are not correct because a Nash arrangement is a type of non-cooperative game in which each player chooses its best strategy given the other players' choices, monopolistically competitive oligopoly is a type of market structure where there are many firms with differentiated products, and perfectly competitive oligopoly is not a valid concept.

When Firms Have Agreements Among Themselves on the Quantity to Produce