Final answer:
Collusion is when firms in an oligopoly agree to set the same or similar prices, acting against the principles of perfect competition.
Step-by-step explanation:
When firms agree to charge the same or similar prices for a product, this practice is known as collusion. Collusion occurs when oligopoly firms in a particular market decide to coordinate their actions to reduce output and keep prices high, essentially acting as a monopoly. When they explicitly agree to do so, they may even form a cartel. This strategy is in stark contrast to perfect competition, where many sellers exist, barriers to entry are low, products are identical, and sellers are price takers, adjusting their prices according to the market rather than influencing it collaboratively.