Question

The sugar industry in Canada is effectively adopoly with two large competing with each other for market share Suppose the two forms collade and such restricto put to that of a prol malming monepolis. As are they each reare an increase in the profits Why was cose agreement beto ustan? OA. Became the form with the long run verage costs will be able to capture al sales, driving the second most of the market OB. Because each firm has an incentive to break the agreement by increasing output in order to increase their own profits OC. Became an operative outcomes inevitable in which output starther restricted and each fo's profit is reduced OD. Became acho has an entire to break the agreement by further resisting output in order to increase the price, thereby increasing the profes

Answer 1

Answer b. Because each firm has an incentive to break the agreement by increasing output in order to
increase their own profits

reason- After collusion, the firms have restricted the output. This leads to a rise in profits.

This collusion will not work because each firm has an incentive to cheat and produce more output thereby gaining market share and increasing their profit.