Question

Companies under market structures are interdependent. is a secret agreement among companies that may result from this interdependence.

Answer 1

1. Companies under "oligopolistic" market structures are interdependent.

An oligopoly refers to a market structure in which a couple of firms dominate. At the point when a market is shared between a couple of firms, it is said to be exceedingly focused. In an Oligopoly market structure, there are a couple of reliant firms rule the market. They are probably going to change their costs as per their competitors. For instance, if Pepsi changes their value or price, Coca-Cola will change their price too.  

2. "Collusion" is a secret agreement among companies that may result from this interdependence.

Collusion refers to a secret cooperation or deceitful agreement so as to misdirect others, in spite of the fact that not really illegal, as a conspiracy. A secret agreement between at least two groups to confine open challenge by deceiving or misleading others of their legitimate rights, or to acquire a goal forbidden by law normally by cheating or picking up an unfair market advantage is a case of collusion.

Answer 2

The correct answers are the following

• Companies under oligopolistic market structures are interdependent
• A collusive agreement or cartel is a secret agreement among companies that may result from this interdependence.

An oligopoly is a market structure characterized by a few powerful producers. There is interdependence among them because the decisions of each, affect the sales and profits of the others. Therefore, the firms that participate in an oligopoly have to strategically plan their actions.

Sometimes, it can be profitable for such firms to reach an agreements instead of competing. For example, they can jointly fix the market price of the product or set production quotas for each. These behaviours are illegal, this is why they are undertaken in secret.