Q.7 Recall the model of tacit collusion and cyclical demand that we studied. We saw that the no-deviation condition is harder to satisfy in the good state than in the bad state. Consider two explanations for this: I: In the good state, a deviation is more attractive from the current period's perspective II: A deviation in the good state is followed by higher expected profits in the future Which explanation(s) is(are) correct? Max. score: 2.5; Neg. score: 2 Only Il Both I and II Only