If Two Firms Use a Tit-For-Tat Scheme to Maintain Cartel

question 21

Multiple Choice

If two firms use a tit-for-tat scheme to maintain cartel pricing and one firm chooses a high price in the current time period then

• A) that firm will also choose a low price in the next time period.
• B) that firm will also choose a high price in the next time period.
• C) the other firm will choose a low price in the next time period.
• D) the other firm will choose a high price in the next time period.