If duopoly firms that are not colluding were able to successfully collude, then
A)price and quantity would rise.
B)price and quantity would fall.
C)price would rise and quantity would fall.
D)price would fall and quantity would rise.

Question

Quizplus · Accepted Answer

When duopoly firms that are not colluding decide to collude, they effectively reduce competition between themselves. This allows them to act more like a monopoly, setting higher prices than they would in a competitive scenario. As a result, the price would rise. However, the higher price would lead to a decrease in quantity demanded, hence quantity would fall.

If Duopoly Firms That Are Not Colluding Were Able to Successfully