Question 1 Report
An organization of producers of similar products, which controls output with the intention to fix price is a
This question tests knowledge of the different forms of business combination and the specific purpose each one serves.
When independent producers of similar goods agree to work together specifically to control how much is produced, with the deliberate goal of keeping prices at a level they choose, this arrangement is called a cartel. Members of a cartel remain independent businesses, but they coordinate output levels so that supply stays low enough to keep prices fixed at an agreed rate.
The other terms describe different arrangements. A trust involves firms being combined more completely, often under common ownership or control, usually to eliminate competition altogether rather than simply to fix prices while remaining separate. A syndicate is a group of firms or individuals that combine temporarily, often to finance or carry out a large project such as underwriting a big loan or issue. A consortium is likewise a temporary joint venture formed by independent firms for a specific project, without the ongoing price-fixing intention that defines a cartel.
The defining clue in this question is the explicit intention to fix price while controlling output; whenever both of those elements appear together, the correct term is cartel.
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