In the Scenario Above, If Both Firms Cheat on the Agreement

question 209

Multiple Choice

In the scenario above, if both firms cheat on the agreement, producing more than the agreed amount, then

• A) each firm makes zero economic profit.
• B) the outcome is identical to a monopoly.
• C) the industry's economic profit is the maximum profit that can be made by the duopoly.
• D) each firm makes a greater economic profit than it would make if it complied with the agreement.