Punishment for cheating on pricing agreements usually takes the form of

a. a retaliatory advertising campaign.

b. a retaliatory price cut.

c. a legal suit.

d. a monetary fine.

• The correct option is b. A retaliatory price cut.

Usually, the major agreements related to the pricing is related to the oligopoly market wherein the demand reaction for a price cut not only affects the initial price by the firm but also makes the rival firm's to retaliate. If any firm breaches the collusion agreement then the firm might enter into the price war.