Informal collusion to restrict output and increase prices is sometimes referred to as a
A) merger.
B) cartel.
C) tacit understanding.
D) kinked-demand oligopoly.

Question

Quizplus · Accepted Answer

Informal collusion refers to a situation where firms coordinate their actions and behavior without an explicit agreement or communication. This type of collusion is also called tacit understanding or implicit collusion. It involves firms acting in a way that is consistent with higher prices and reduced output, even if they have not explicitly agreed to do so. Merger and cartel suggest more formal and structured collusion agreements, while kinked-demand oligopoly refers to a particular type of market structure with a unique demand curve.

Informal Collusion to Restrict Output and Increase Prices Is Sometimes