6.Assume that there are six firms in a country's carpet manufacturing industry and that they collude to restrict output, thereby maintaining a high price. Under which of the following circumstances is collusion likely to break down?

(a) The government imposes higher duties on imported carpets.....................................Yes / No

(b) Several new chains of discount carpet retailers enter the market...............................Yes / No

(c) One of the firms develops a new cost-saving technique of producing carpets..........Yes / No

(d) Three of the smaller manufacturers merge.................................................................Yes / No

(e) One of the firms becomes dominant in the industry..................................................Yes / No

(f) The demand for carpets falls......................................................................................Yes / No

(g) Legislation is passed preventing the exchange of information by producers on costs, sales and product development...............................................................................................................Yes / No

7. Which of the following are examples of tacit collusion?

(a) Price leadership by a dominant firm...........................................................................Yes / No

(b) Agreements 'behind closed doors'..............................................................................Yes / No

(c) Discounts to retailers..................................................................................................Yes / No

(d) Setting prices at a well-known benchmark.................................................................Yes / No

(e) Increased product differentiation within the industry................................................Yes / No

(f) Price leadership by a barometric firm........................................................................Yes / No