A cartel is a group of firms that collude to control output and maximize group profits by coordinating prices and production levels. This is typically done by restricting supply and inflating prices, which reduces competition and increases profits for the participating firms. Cartels are illegal in many countries, including the United States.

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A Cartel Is

Question 23

Multiple Choice

A cartel is

A) generally legal in the United States.
B) a group of firms acting under collusion to control output and maximize group profits.
C) similar to a monopolistically competitive industry.
D) a group of firms acting like a perfectly competitive industry.

Correct Answer: