11/5/2017 11:55 PM A 46.6/100 11/5/2017 01:29 PM Gradebook Question 12 of 40 Bel

Question

11/5/2017 11:55 PM A 46.6/100 11/5/2017 01:29 PM Gradebook Question 12 of 40 Below is the demand curve for the market for Monster Trucks. There are two Monster Truck producers. For simplicity, assume that the costs of producing a Monster Truck is zero. (AC-0, FC = 0) Assume the two answer the first three questions. Answar het het r s collude (split production and profits evenly) to What price will they charge? What is the total quantity produced? S18 $16 $14 $12 $10 Monster Trucks What are the profits of each firm? S7 if one of the producers produces an extra unit to get higher profits, what is the new market price? What are y break the agreement? Cheaters profits Other firm's profits

Explanation / Answer

quesion 11 of 40.

the answer is as follows.

a) at the long run equilbruim, the price is $100.

because, in long run run equilbruim, the price must be equal to average total cost . and atc is equal to $100 and the firm is in long run equilbruim initially.

b) When demand decreases - all these events occur according.

1) Price decreases. 2) Supply decreases . 3) Firms exit. 4) Price increases. 5) supply increases.

because, when the demand for a product decreases. the price of the product also decreases because people no longer want to buy the product at higher price thus price will decreases. as the price decrease , it will result in the decrease in the supply. because when price is decrease, the supplier will reduce the supply because the profits are reduced. as a result, firms will exit the industry because firms are not creating profits enough to cover its cost. when firms exit the industry, the supply decreases, which increases the price of the product because of the short of supply. when the price increase, the supply also increases.

question 12 of 40. ( please upload it again. chegg policy)

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