The only 2 producers of a particular good are identical firms with the same constant marginal cost equal to 5.The aggregate demand curve for this product is Y=15-p.The two firms collude, agree to produce the same amount, and maximize their joint profits.If the collusive agreement breaks down, the Cournot equilibrium (the equilibrium of the competition between firms where they choose their quantities simultaneously and the market determines the price given the total quantity produced) will prevail in this market forever.If the interest rate the firms have access to is 0.75 (that is, 75%), will the collusive agreement be stable?

Select one:

a.No

b.None of the other answers.

c.Yes