The following table is for two towel companies. They each offer cotton towels that are highly absorbent and fluffy even though they are made from different cottons. Since every household uses towels, these firms believe that there will always be a tomorrow for their product. Both Tom and Cathy have agreed to charge high prices in order to make a more than normal profit. Neither firm will charge a lower price as there is a credible threat of punishment from the other.

Question

Quizplus · Accepted Answer

The passage mentioned that both firms agreed to charge high prices in order to make a more than normal profit, and neither will charge a lower price due to a credible threat of punishment from the other. Therefore, it is true that both companies will charge high prices.

The Following Table Is for Two Towel Companies