Suppose the market for bottled water is served by two oligopolists. If they reach an agreement to restrict production and charge a price above marginal cost, then:
A. neither firm will have an incentive to cheat on the agreement since it benefits them both.
B. their agreement is likely to eventually collapse.
C. they will charge a higher price than a monopolist would have charged.
D. they will earn a larger profit than a monopolist would have earned.
Answer: B
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