In an oligopoly with a collusive agreement, the total industry profits will be smallest when
A) all firms comply with the agreement.
B) one firm cheats on the agreement and the other firms do not cheat.
C) all firms cheat on the agreement.
D) the firms act as a monopoly.

Question

Quizplus · Accepted Answer

In an oligopoly with a collusive agreement, if all firms cheat, they will compete against each other, leading to lower prices and reduced profits, similar to a competitive market.

In an Oligopoly with a Collusive Agreement, the Total Industry