In a Duopoly with a Collusive Agreement and in a One-Time

question 254

Multiple Choice

In a duopoly with a collusive agreement and in a one-time only game, a firm's profit is largest if it ________ the agreement and if the other firm ________ the agreement.

• A) complies with; complies with
• B) complies with; cheats on
• C) cheats on; complies with
• D) cheats on; cheats on

---

Definitions:

Cognitive Dissonance

The discomfort in one's mind arising from the coexistence of opposing beliefs, ideas, or values.

Physical Arousal

The physiological response of the body to stimuli, evident in signs such as increased heart rate, sweating, or rapid breathing.

Inner Awareness

Inner awareness is the subjective experience of one's thoughts, feelings, and sensations; an introspective attention to one's internal state.

Kin Selection Hypothesis

A theory in evolutionary biology suggesting that behaviors that help a genetic relative are favored by natural selection.