An association of producers in an industry that agree to set common prices and output quotas to prevent competition is
A) an oligopolist.
B) a monopolistic competitor.
C) a constrained monopoly.
D) a cartel.

Question

Quizplus · Accepted Answer

A cartel is an association of producers in an industry that agree to set common prices and output quotas to prevent competition. The purpose of a cartel is to increase profits by reducing output and driving up prices. By coordinating their production decisions, cartel members can avoid price wars and other forms of destructive competition. OPEC (Organization of Petroleum Exporting Countries) is a well-known example of a cartel in the oil industry.

An Association of Producers in an Industry That Agree to Set