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

Question

Quizplus · Accepted Answer

In a one-time only game, if one firm cheats on the collusive agreement while the other complies, the cheating firm can capture a larger market share and earn higher profits at the expense of the complying firm.

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