Happy Campers and Camping R Us Are in Tacit Collusion

question 27

Multiple Choice

Happy Campers and Camping R Us are in tacit collusion to cooperate and each charge a high price for their campers. If Happy Campers initially cooperates with Camping R Us, but then switches and charges a low price and Camping R Us responds by forever charging a low price, this is an example of________ .

• A)a trigger strategy
• B)a dominant strategy
• C)a tit- for- tat strategy
• D)a one- shot game

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Definitions:

Nondiscriminating Monopolist

A monopolist who charges all consumers the same price for a product, unlike a price-discriminating monopolist who charges different prices.

Marginal Revenue

The additional income earned by selling one more unit of a product or service, reflecting the incremental increase in total revenue.

Nondiscriminating Profit-maximizing Monopolist

A monopolist who charges a uniform price for all units of output sold to all customers, maximizing profit without price discrimination.