A cartel is defined to be
A)any oligopolistic industry with fewer than 4 firms.
B)a form of oligopoly in which firms agree to sell at different prices like in monopolistic competition.
C)a form of oligopoly in which firms formally agree to establish a common strategy,often a common price,in effect acting like a monopoly.
D)a form of oligopoly in which firms agree to compete with each other on an equal basis.

Question

Quizplus · Accepted Answer

A cartel is a group of firms that come together to form a formal agreement to establish a common strategy, often a common price, in effect acting like a monopoly. This allows the cartel to restrict competition and increase profits for all members. Option A is incorrect because it does not include the aspect of a formal agreement among firms. Option B is incorrect because it describes a form of oligopoly known as monopolistic competition, where firms sell similar but differentiated products at different prices. Option D is incorrect because it describes a situation where firms are competing with each other rather than behaving like a cartel.

A Cartel Is Defined to Be