Question

Which of the following factors would make it more difficult for a seller in the market for coffee to collude successfully with his rivals?

A) The coffee market includes a small number of firms.B) Firms in the coffee market place a very high value on profits earned in the present but discount significantly future profits.C) Coffee consumers are very loyal.D) Prices in the coffee market are relatively stable and do not change often.E) The antitrust agencies shut down and stop looking for cartel activity.

Answer 1

A) The coffee market includes a small number of firms.

Step-by-step explanation:

Collusion in business refers to an illegal cooperation between competitors in order to disrupt the market's equilibrium. Competitors should be competing against each other, not making agreements between them to reduce competition.

Collusion generally harms smaller competitors and consumers, that is why it is considered illegal.