1. For firms with a low-price guarantee, the promise of matching a lower price is a(n)                 promise because all firms will charge the same                       price. 2.Suppose that Jack...

1. For firms with a low-price guarantee, the promise of matching a lower price is a(n)
promise because all firms will charge the same
price.

2.Suppose that Jack and Jill use a tit-for-tat scheme to encourage cartel pricing. Jill chooses the low price for two successive months, and then switches to the high price. The two firms will deviate from cartel pricing for a total of
months.

3. If two firms expect to be in the market together for a long time, the
 (cost/benefit) of underpricing will be large relative to the
 (cost/benefit).

4. If a seller promises to refund any difference between its price and the price of its competitors, this practice will lead to
 (higher/lower) prices.

5. A careful study of the retail tire market suggests that low-price guarantees

(increase/decrease) prices by about
 (1, 10, 25, 37) percent. (Related to Application 2 on page 610.)