What is a cartel in the context of business practices?

A cartel refers to an agreement among competing firms to regulate prices and output, often leading to higher prices for consumers and reduced competition in the market. In this context, collusion among organizations to fix prices is a defining characteristic of a cartel, as these companies work together rather than competing against each other. This collaboration can range from setting a common price for a product to limiting production levels to stabilize or increase market prices, which can harm consumers and market competition.

Understanding this concept is crucial, especially since cartels are typically illegal in many jurisdictions due to their negative impact on market dynamics and consumer welfare. They are often closely monitored by regulatory authorities to maintain healthy competition within industries. The other options do not capture the essence of a cartel: A describes a competitive situation that does not involve collusion, C implies a cooperative effort for community interests rather than profit, and D focuses on a specific business strategy unrelated to pricing agreements among firms.