What can result from a successful collusion among firms?

A successful collusion among firms typically leads to higher prices and reduced output. When firms collaborate rather than compete, they can effectively act as a single entity in terms of pricing and production decisions. This behavior allows them to set prices above the competitive equilibrium level, which is the price that would normally prevail in a competitive market.

As a result of these higher prices, consumer demand usually decreases, leading the firms to reduce their output. This outcome contrasts sharply with the intentions of a competitive market, where firms striving for market share would increase output to attract more customers and lower prices due to competitive pressure.

The other options do not align with the typical outcomes of successful collusion. For instance, increased production costs usually stem from factors unrelated to collusion, such as changes in resource prices or regulatory changes. Similarly, collusion does not lead to lower profit margins for firms involved; in fact, it often boosts their profitability as they work collectively to increase prices. Lastly, enhanced competition within the market is counterintuitive to collusion, as the very nature of collusion erodes competition among the involved firms.