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A group of firms that explicitly agree to coordinate price and output to act jointly like a monopoly is called a:
ABilateral monopoly
BDuopoly
CMonopsony
DCartel
Answer & Solution
Correct answer: D. Cartel
1. A cartel is an explicit agreement among firms to coordinate their activities.
2. By colluding on price and output they behave like a single monopoly.
3. This raises joint profit, especially when demand is inelastic.
4. OPEC is a well-known example of such a cartel.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 4 Unit III "Price-Output Determination under Different Market Forms", p.27_
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