Suppose all automobile manufacturers have collusively agreed to sell their cars at a uniform price. If a firm wanted to break this agreement and not be detected, what would be one way to do this?
One answer might be secret price cuts to individuals, but these could be detected. The best way to effectively lower price would be to hold the price constant and improve the quality of the product. Better quality parts and accessories or more precise manufacturing methods to increase performance and reliability could be used, and extra options could be included to increase market share. A better product selling at the agreed-to price would be more difficult to detect.
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Both the nominal rate of interest and the real return on investment increase with the inflation rate
Indicate whether the statement is true or false
Refer to Table 14-8. If the firms act out of individual self-interest, which prices will they select?
A) Brawny Juice will select a high price, Power Fuel will select a low price. B) Brawny Juice will select a low price, Power Fuel will select a high price. C) Both firms will select a high price. D) Both firms will select a low price.