When Two Firms Agree to Collude to Establish a Price

question 106

Multiple Choice

When two firms agree to collude to establish a price and eliminate price competition, it is called:

• A) oligopoly.
• B) market sharing.
• C) output-shading.
• D) price-fixing.

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Definitions:

Capacity to Contract

The legal capability of an individual or entity to enter into a binding contract.

Mental Impairment

A condition that affects a person's thinking, feeling, mood, or ability to relate to others, significantly impacting daily functioning.

Intoxication

A condition resulting from the consumption of alcohol or drugs which impairs mental and physical faculties.

Capacity to Enter

Refers to the legal ability of a party to enter into a binding contract, often requiring that the individual be of a certain age and sound mind.