When two or more firms form a ________ agreement and set price and quantity in unison,economists refer to them as ________.
A) competitive; a cartel
B) collusive; social benefactors
C) collusive; a cartel
D) monopolistically competitive; social benefactors
E) monopolistically competitive; a cartel

Question

Quizplus · Accepted Answer

When two or more firms form a collusive agreement and set price and quantity in unison, economists refer to them as a cartel. Choice A is incorrect because a competitive agreement implies that firms are competing with each other, whereas a cartel involves colluding to reduce competition. Choice B and D are incorrect because social benefactors and monopolistically competitive agreements are not relevant to the question asked.

When Two or More Firms Form a ________ Agreement and Set