Question

How does collusion make firms better​ off (select one)?

A. The firms can act as a single​ entity, like a monopoly.
B. The firms can charge lower prices and sell a smaller quantity and still increase profits.
C. The firms can charge lower​ prices, but sell a greater quantity and thus earn higher revenues.
D. Both A and B.
E. Both A and C.

Answer 1

Answer:

The correct answer is C

Explanation:

Collusion happens when the rival firms or the business agreed to work together in the market. It is a way or method for the firms in order to earn high profits by reducing or decreasing the competitiveness of the market.

So, the collusion make the firms better off when the firms charge lower prices from the customer and sell larger quantity and able to earn high profits.