The Equilibrium Strategy for Each Firm in a Duopolist's Dilemma

question 31

Multiple Choice

The equilibrium strategy for each firm in a duopolist's dilemma is to ________. Firms ________ succeed in raising price and profits because each firm ________.

• A)comply; do not; makes a smaller economic profit if it complies with the agreement, but complying with the agreement is in the social interest, and most firms support the social interest
• B)comply; do; makes greater economic profit if it complies with the agreement, regardless of how the other firm acts
• C)cheat; do not; makes greater economic profit if it cheats on the agreement, regardless of how the other firm acts
• D)cheats; do; makes greater economic profit if it cheats on the agreement, regardless of how the other firm acts
• E)cheat; do; refuses to sell at any price below the monopoly price

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