Suppose two firms in a duopoly implicitly collude and charge a high price How

Suppose two firms in a duopoly implicitly collude and

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67) Suppose two firms in a duopoly implicitly collude and charge a high price. How might each firmbenefit from advertising that it will match the lowest price offered by its competitor?A) The advertisement ensures that the other firm does not cheat. If a firm cheats on theagreement and charges the lower price, the rival firm will retaliate by doing the same.B) The offer to match prices is a way of signaling to antitrust authorities that the firms are notengaged in illegal collusion.C) The offer to match prices is a way of deterring entry by other large firms, thereby keeping themarket share of the existing firms intact.D) The advertisement is meant to suggest to consumers that the offered price is actually thelowest price available.Answer: A67)Diff: 3Page Ref: 468/468Topic: CollusionLearning Outcome: Micro 16: Discuss the functions of cooperation, competition, and public policies inoligopoliesAACSB: Analytic Skills68) In an oligopoly, firms can increase their market power by68)Diff: 2Page Ref: 468/468Topic: CollusionLearning Outcome: Micro 16: Discuss the functions of cooperation, competition, and public policies inoligopoliesAACSB: Reflective Thinking69) If the painting firms in a city sign a contract outlining a pricing plan, they are involved in69)Diff: 1Page Ref: 468/468Topic: CollusionLearning Outcome: Micro 16: Discuss the functions of cooperation, competition, and public policies inoligopoliesAACSB: Reflective Thinking70) Collusion70)Diff: 2Page Ref: 468/468Topic: CollusionLearning Outcome: Micro 16: Discuss the functions of cooperation, competition, and public policies inoligopoliesAACSB: Reflective Thinking19

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