Suppose there are two coffee shops in your college town, Laughing Monkey Latte and Kelly's Coffee Krush, and they decide to operate collusively as a cartel. If both shops abide by the cartel's agreement, each will earn $80000 in profit. If both shops cheat on the cartel's agreement, both will earn $15000 in profit. If one shop cheats and the other abides by the agreement, the cheater will earn a profit of $120000, while the shop that abides will have a loss of $7500. The Nash equilibrium between Laughing Monkey Latte and Kelly's Coffee Krush occurs when Choose one: O A. both shops abide by the cartel's agreement. B. both shops cheat on the cartel's agreement. C. Laughing Monkey Latte cheats on the agreement and Kelly's Coffee Krush abides by the agreement. D. There is no Nash equilibrium for Laughing Monkey Latte and Kelly's Coffee Krush.
