Final answer:
A cartel is a group of firms that collude to control the market by setting monopoly output and pricing, which reduces competition and keeps prices high.
Step-by-step explanation:
A cartel exists when various companies producing similar products or services work together to control markets for the types of goods and services they produce. A cartel is a group of firms that collude to control the market by setting monopoly output and pricing, which reduces competition and keeps prices high.
In an oligopolistic market structure, these firms may collude to act as a monopoly by agreeing to produce the monopoly output and sell at the monopoly price. This collusion results in firms holding down industry output while charging higher prices, dividing the profit among themselves.
An example of a cartel is the Organization of Petroleum Exporting Countries (OPEC), which consists of nations that collaborate on the production and pricing of oil.