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Figure: Pricing Strategy in Cable TV Market II
-(Figure: Pricing Strategy in Cable TV Market II) Look at the figure Pricing Strategy in Cable TV Market II. If the two firms in the cable TV market collude:
A) CableNorth will set a high price and earn $80,000 per month, and CableSouth will set a low price and earn $130,000 per month.
B) CableNorth will set a low price and earn $130,000 per month, and CableSouth will set a high price and earn $80,000 per month.
C) both firms will set a low price and each will earn $90,000 per month.
D) both firms will set a high price and each will earn $100,000 per month.

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Use the following to answer questions:
Figure: Pricing Strategy in Cable TV Market II 
-(Figure: Pricing Strategy in Cable TV Market II) Look at the figure Pricing Strategy in Cable TV Market II. If the two firms in the cable TV market collude:
A) CableNorth will set a high price and earn $80,000 per month, and CableSouth will set a low price and earn $130,000 per month. 
B) CableNorth will set a low price and earn $130,000 per month, and CableSouth will set a high price and earn $80,000 per month. 
C) both firms will set a low price and each will earn $90,000 per month. 
D) both firms will set a high price and each will earn $100,000 per month.

Quizplus · Accepted Answer

When firms collude, they typically agree to set higher prices to maximize joint profits, leading both firms to set a high price and earn $100,000 each.

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