Question

A ___________ is a group of companies joined to eliminate competition, fix prices at high levels and drive smaller competitors out of business.
a.

business alliance

b.

stock exchange

c.

corporation

d.

trust

Answer 1

Answer:

The correct answer is D. A trust is a group of companies joined to eliminate competition, fix prices at high levels and drive smaller competitors out of business.

Explanation:

A trust is a contractually agreed union of several companies. The aim can be to create a market or production monopoly in order to be able to eliminate competition and thus fix prices. Most of the time the companies give up their legal and economic independence, which then lies with the managing trustees of the holding company, but not the participation in the profits of the holding company.

The difference between a cartel and a trust is that a trust is a combination of several companies into one, while a cartel is a close partnership between two or more. Trusts pursue similar goals as corporations, but can pursue them more efficiently, since the subordinate companies have become completely dependent.