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    Question

    In the economic theory of oligopoly, when competing

    firms engage in a formal agreement to set prices or production levels to maximize collective profits, this is referred to as:
    A Perfect Competition Correct Answer Incorrect Answer
    B Price Discrimination Correct Answer Incorrect Answer
    C Market Cannibalization Correct Answer Incorrect Answer
    D Cartel Formation Correct Answer Incorrect Answer
    E Monopolistic Behavior Correct Answer Incorrect Answer

    Solution

    A cartel is a formal arrangement between competing firms to fix prices or output. It limits competition and is typically illegal in regulated economies.

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