Final answer:
If oligopolistic firms stop colluding, the price of their product will most likely decrease since they will compete by cutting prices and increasing production, leading to a reduction in industry-wide profits.
Step-by-step explanation:
When firms in an oligopoly collude, they behave similarly to a monopoly by reducing industry output and setting higher prices, leading to higher collective profits. In such a case, the price is likely higher, and the quantity supplied is lower than in a competitive market, to maximize their total profits.
If the cartel breaks up and firms compete, they are likely to cut prices and increase production to capture a larger market share, leading to increased industry quantity but lower prices and profits for each firm. This competition drives the price closer to the marginal cost, which is typically lower than the cartel price, and increases the total quantity sold in the market.
Therefore, if firms were forced to stop colluding, the most likely outcome is Option 2: Decrease. The intense competition would lead to a reduction in price to gain market share. However, the exact amount of decrease and the new equilibrium price and quantity would depend on the market specifics.