Which term best describes a secret agreement among competitors to fix prices or divide markets?

• A. Price fixing
• B. Collusion
• C. Oligopoly
• D. Monopoly

Answer: (B)

Collusion is the idea being tested here: a secret agreement among competitors to restrain competition. When rivals secretly decide to fix prices or divide markets, they are colluding. Price fixing is a specific form of collusion that targets setting prices at a common level, but the general term for the secret agreement itself is collusion. An oligopoly describes a market structure with only a few dominant firms, and a monopoly describes a market with a single seller; neither captures the act of an illicit agreement itself. So, collusion best describes the scenario.