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Business, 22.07.2021 15:20 Amitp8799

Firms A and B plan to collude in an economy for their similar​ products, which includes the grim strategy for punishment. They plan to set the price of their product at​ $8. The marginal cost of Firm A is​ $5 and Firm B is​ $4.50. If firm A is impatient to earn more profits and Firm B wishes to last in the business for the​ long-run, which of the following situations would likely​ occur? A. Firm B reduces the price to​ $7 causing Firm A to exit the market. B. Firm B reduces the price to​ $7 causing Firm A to reduce its price to​ $7. C. Firm A reduces the price to​ $7 causing Firm B to reduce its price to​ $4.50. D. Firm A reduces the price to​ $7 causing Firm B to exit the market.

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