Generally,long-run profits for firms that cheat on purely collusive agreements in various ways fall somewhere between the perfect competition,zero-economic-profit solution and the perfect cooperation,shared-monopoly-profit solution.

Question

Quizplus · Accepted Answer

This statement is true. Firms that cheat on collusive agreements may still earn economic profits in the long run, but these profits will be lower than what they could have earned if they had fully cooperated with each other. The exact level of profits will depend on the specific nature of the cheating behavior and market conditions.

Generally,long-Run Profits for Firms That Cheat on Purely Collusive Agreements