COPY: Impacts of price information on market tructure
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Questions and Answers

What effect does improved observability of prices by sellers have on market outcomes?

  • It increases competition and raises consumer surplus
  • It has no impact on market outcomes
  • It enables tacit collusion and increases firm profits (correct)
  • It reduces competition and lowers firm profits

    • What is the potential outcome of firms randomizing prices within an interval to confuse consumers and competitors?

  • It increases competition and raises consumer surplus
  • It has no impact on market outcomes
  • It reduces competition and potentially leads to higher profits (correct)
  • It reduces profits and leads to lower prices

    • How does better observability of prices by buyers affect market competition and firm profits?

  • It increases market competition and decreases firm profits
  • It increases market competition and raises consumer surplus (correct)
  • It has no impact on market competition or firm profits
  • It decreases market competition and increases firm profits

    • What is the effect of imperfect observability of prices by buyers, where some can see all prices and others only one price?

    <p>It leads to price dispersion where different firms set different prices</p> Signup and view all the answers

    How does transparency of prices affect the ability of firms to sustain higher prices through tacit collusion?

    <p>Transparency makes it easier to sustain higher prices through tacit collusion</p> Signup and view all the answers

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