Final answer:
A group of firms that colludes to restrict output and increase prices and profits is known as a cartel. Firms in an oligopoly may collude to create a monopoly-like situation, which is illegal in many countries and often unenforceable internationally.
Step-by-step explanation:
A group of firms that colludes by agreement to restrict output to increase prices and profits is called a cartel. When oligopolistic firms, typically in a market where there are few sellers, decide to collude, they work together to act similarly to a monopoly. This collusion allows them to hold down industry output, charge higher prices, and divide the profits among themselves. A well-known example of such a collaboration is the Organization of Petroleum Exporting Countries (OPEC), which consists of nations that have agreed to regulate the supply of oil to maintain certain price levels. However, it's important to note that such explicit collusion is illegal in many countries, including the United States, and the agreements are not legally enforceable in a gray area of international law.