Question: Assume that there are only five oligopolists in the national carpet manufacturing industry and they collude to restrict output, thereby maintaining a high price. Under which of the following circumstances is collusion likely to break down and why?

(a) The government imposes higher duties on imported carpets...........................................................

(b) Several new chains of discount carpet retailers enter the market.......................................................

(c) One of the firms develops a new cost saving technique of producing carpets..................................

(e) One of the firms becomes dominant in the industry.......................................................................

(f) The demand for carpets falls..............................................................................................................