Two Firms Would Sometimes Be Better Off If They Got

question 62

Multiple Choice

Two firms would sometimes be better off if they got together and agreed to charge a high price, rather than to compete and risk having to charge a lower, competitive price.What is the greatest deterrent to this strategy?

• A)The firms may find that the price they charge is greater than the price that would maximise their profits.
• B)An agreement by firms to charge high prices is illegal.The government can fine the firms and send their managers to jail.
• C)Consumers may resent having to pay high prices and not buy from either of the firms.
• D)One of the firms may decide to lower its price and take business away from the firm that charged the high price.

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Definitions:

In-group Members

Individuals belonging to or identifying with a specific group or category that shares common interests, values, or characteristics.

Reference Groups

Groups to which individuals compare themselves to form opinions, attitudes, or define norms and values.

Role Models

Individuals admired for their qualities or achievements, serving as positive examples for others to emulate in their own behaviors and decision-making.

Self-Esteem

The subjective evaluation an individual has of their own worth, incorporating attitudes towards self-value and self-acceptance.