### Identifying Scenarios of Collusion or Competition**a. Identify the following scenarios as examples of collusion or competition**1. 3 major companies make up the game console market and agree to all raise prices - (Options to select: Competition or Collusion)2. GolfPro shop lowers their price to take customers away from their competitors - (Options to select: Competition or Collusion)3. Horion, a phone service company invests heavily in new technology to improve and gain customers - (Options to select: Competition or Collusion)**A.** Competition **B.** Collusion **b. Oligopolies have an incentive to collude because**- [ ] A. US laws promote collusion- [ ] B. They can increase profit- [ ] C. Competition can be harmful- [ ] D. They can better compete

Answered: A. Competition B. Collusion

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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### Identifying Scenarios of Collusion or Competition

**a. Identify the following scenarios as examples of collusion or competition**

1. 3 major companies make up the game console market and agree to all raise prices
- (Options to select: Competition or Collusion)

2. GolfPro shop lowers their price to take customers away from their competitors
- (Options to select: Competition or Collusion)

3. Horion, a phone service company invests heavily in new technology to improve and gain customers
- (Options to select: Competition or Collusion)

**A.** Competition
**B.** Collusion

**b. Oligopolies have an incentive to collude because**

- [ ] A. US laws promote collusion
- [ ] B. They can increase profit
- [ ] C. Competition can be harmful
- [ ] D. They can better compete

Expert Solution

Step 1

A collusion takes place when two or more firms agree to reduce competition and by restricting output and charges higher price for the output. Whereas in competition, firms compete with each other with respect to price, output to create customers for their business.

As there are 3 firms in the game console and all agree to raise prices without stating any specific reason, this will be example of collusion
As there is price competition between sellers, this will be example of competition.
As company invest heavily in new tech to gain customers, this will be example of competition.

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