Why do firms in an oligopoly have an incentive to cheat on collusion agreements? A. Cheating prevents other firms from lowering prices. B. Cheating produces a kinked demand curve for the industry. C. Cheating results in greater profits for the individual firm. D. Cheating increases the industry's total profits.

Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter17: Oligopoly
Section17.2: The Economics Of Cooperation
Problem 2QQ
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Why do firms in an oligopoly have an incentive to cheat on collusion
agreements?
A. Cheating prevents other firms from lowering prices.
B. Cheating produces a kinked demand curve for the industry.
C. Cheating results in greater profits for the individual firm.
D. Cheating increases the industry's total profits.
Transcribed Image Text:Why do firms in an oligopoly have an incentive to cheat on collusion agreements? A. Cheating prevents other firms from lowering prices. B. Cheating produces a kinked demand curve for the industry. C. Cheating results in greater profits for the individual firm. D. Cheating increases the industry's total profits.
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