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A group of firms with a formal agreement to collude and act as a monopoly is called a:
ACalled a merger
BA franchise deal
CA cooperative
DCalled a cartel
Answer & Solution
Correct answer: D. Called a cartel
1. Colluding firms try to capture monopoly profits without merging.
2. A group of firms that have a formal agreement to collude is called a cartel.
3. The agreement is to produce the monopoly output and sell at the monopoly price.
4. A merger would combine the firms into one rather than leaving them separate.
_Source: OpenStax Principles of Microeconomics for AP(R) Courses 2e (CC BY 4.0), Ch 10 'Monopolistic Competition and Oligopoly', sections 10.1-10.2_
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