-The above figure shows the reaction functions for two pizza shops in a small isolated town.Collusion would result in

Question

Quizplus · Accepted Answer

Collusion typically involves firms agreeing to act together instead of competing against each other, often leading to higher prices and lower outputs than in competitive markets. In this context, if the two pizza shops collude, they would likely agree to split the market to maximize their joint profits, which would result in each firm producing half of the total optimal monopoly output, hence making 50 pizzas each.

-The Above Figure Shows the Reaction Functions for Two Pizza