Tacit collusion is more likely to be successful in increasing industry profits when there are a few, similar firms in the industry because it is easier for these firms to monitor each other's actions and maintain the collusion without explicit communication or agreements.

Solved

Tacit Collusion

Question 67

Multiple Choice

Tacit collusion

A) is legal under the U.S. antitrust laws.
B) occurs when firms engage in formal agreements to reduce output and increase prices in their industry.
C) is more likely to be successful in increasing industry profits when there are a few, similar firms in the industry.
D) is more likely to effectively raise prices in the industry when demand is elastic.

Correct Answer: