Which of the Following Explains Why Two Firms, Apex and Bongo

question 87

Multiple Choice

Which of the following explains why two firms, Apex and Bongo, would engage in implicit collusion, rather than explicit collusion?

• A) Implicit collusion allows Apex to increase its profits at the expense of Bongo without Bongo knowing that collusion has occurred; if Apex engages in explicit collusion, Bongo will realize collusion has taken place and retaliate against Apex.
• B) Implicit collusion is less costly to both firms than explicit collusion; therefore, profits will be greater for both firms if they engage in implicit collusion.
• C) explicit collusion is illegal; if the managers of Apex and Bongo engage in implicit collusion they may be within the law.
• D) Implicit collusion always has an enforcement mechanism that forces both firms to collude; explicit collusion does not have an enforcement mechanism.

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Definitions:

Different Groups

Diverse collections of individuals categorized by unique characteristics, interests, or attributes, often referred to in the context of social, professional, or cultural distinctions.

Smooth-flowing

Describes processes or operations that proceed in a steady and efficient manner without interruptions.

Orderly Process

A structured series of actions or operations conducted in a systematic sequence to achieve a specific outcome.

Understanding Uncertainty

The process of recognizing and rationalizing the unknown elements in decision-making scenarios.