The correct option that firms are unlikely to do when they engaged in tacit collusion.
Answer to Problem 7MCQ
From the available options, the correct option is to engage in product differentiation.
Explanation of Solution
Firms will be engaged in collusion when there is non-cooperativeness or non-coordination to fix prices and make policies such as
But if the firm is engaged in product differentiation, then there would be no collusion because firms can produce similar but non-identical products in the market.
Therefore, the correct option is (to engage in product differentiation) and all other options are incorrect.
Introduction: Competitors who collude covertly to coordinate their conduct by agreeing to share information but not explicitly exchanging it are said to be acting in collusion.
Chapter 66 Solutions
Krugman's Economics For The Ap® Course
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