Question

Cartel is an agreement between

• A. businesses to restrict the competition and keep prices high
• B. bus owners to restrict the competition
• C. businesses to increase the competition and keep prices low
• D. businesses to restrict the production and keep prices low

Hint:

Cartels limit competition to keep prices high and maximize profits, often violating antitrust laws.

Answer 1

The Correct Option is A

Step 1: Definition of Cartel: A cartel is a formal agreement between competing firms or businesses to control prices, limit production, or restrict competition to maximize collective profits.
Step 2: Objective: The main goal of a cartel is to keep prices artificially high by reducing competition, often leading to higher costs for consumers.
Step 3: Examples: Cartels are commonly found in industries like oil, steel, and pharmaceuticals, and are often illegal under competition law.
Step 4: Incorrect Options: Cartels do not aim to increase competition or keep prices low; they aim to restrict competition and increase prices.
Hence, a cartel is an agreement among businesses to restrict competition and keep prices high.