Question

Suppose there are three commercial concrete suppliers that account for 90% of sales (of nearly identical products) in northern New England. What is the most important thing they can do to earn profits in the commercial concrete industry

Answer 1

Answer: c. Collude

Explanation:

In order to make the maximum profit, the most important thing that these commercial concrete suppliers can do would be to Collude. While this is against fair market practices in a competitive market, it will ensure that they make enough profits in the industry.

With a 90% market share between them, they could collude to establish a price at which they will all sell at and because of their high market share, this is the price that the market will begin to sell at. That price will be a price that is high enough for them all to make sufficient profits therefore the goal of the collusion will be accomplished.