The agreement made between the firms to make price and output decisions said to be
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The agreement made between the firms to make
price and output decisions said to be “A Cartel”
Meaning
of Cartel: “An association of manufacturers or suppliers with the purpose of
maintaining prices at a high level and restricting competition”. It will be a written agreement.
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Answer is - A cartel
A cartel is a group of independent producers whose aim is to increase their collective prices by fixing the price, limiting the supply or by following other restrictive practices. Cartels are formed through a formal agreement between the producers. They generally control the selling prices but sometimes they control the prices of purchased inputs also. Cartels are usually found in oligopolies where there are few sellers and homogenous products.
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