Final answer:
Price fixing is the act of setting fixed prices for goods or services by a group of entities, often forming a cartel, to control the market and replicate monopoly conditions, impeding the natural influence of supply and demand.
Step-by-step explanation:
The collaborative action by one or more persons or entities to set a fixed price for goods or services in order to remove the influence of the free market on price determination is known as price fixing. This is a form of collusion which occurs when oligopoly firms in a given market decide together on the quantity to produce and the price to charge. This collaboration can lead to restricted output and high prices, somewhat imitating a monopoly situation. When these firms formalize their agreement to collude and control the market, it's referred to as a cartel. By doing so, they undermine the competition which is a fundamental principle of a free market or perfect competition where prices are determined by the forces of supply and demand.