It would be impossible for members of the fast-food industry to collude to fix prices because
A) there are not enough fast-food firms in the market.
B) there are too many fast-food firms in the market.
C) fast food is not durable.
D) demanders would not buy from firms that collude.
E) the price of fast food is too low.

Question

Quizplus · Accepted Answer

There are too many fast-food firms in the market, which makes it difficult for them to collude and fix prices. The sheer number of competitors and the ease of entry into the market create a competitive environment, where firms have little incentive to engage in anti-competitive practices such as collusion. Additionally, consumers have a wide range of choices, which makes it likely that they would switch to another fast-food restaurant if the prices were too high.

It Would Be Impossible for Members of the Fast-Food Industry