Which unfair business practice is commonly associated with cartels?

• A. Product innovation
• B. Price fixing
• C. Advertising competition
• D. Market entry facilitation

Answer: (B)

Verified step by step guidance

1. Understand what a cartel is: A cartel is a group of independent firms that collude to control prices or output in a market, reducing competition among themselves.
2. Identify the main goal of cartels: Cartels aim to increase their collective profits by coordinating actions that would otherwise be competitive, such as setting prices or limiting production.
3. Recognize common unfair business practices: These include price fixing, market division, bid rigging, and output restriction, all designed to manipulate the market.
4. Analyze each option in the context of cartels: Product innovation and advertising competition typically increase competition, which cartels want to avoid. Market entry facilitation would allow new competitors, which cartels also want to prevent.
5. Conclude that the unfair business practice most commonly associated with cartels is price fixing, where cartel members agree to set prices at a certain level rather than competing.