9. The accompanying table shows the demand schedule for vitamin D. Suppose that
ID: 1122246 • Letter: 9
Question
9. The accompanying table shows the demand schedule for vitamin D. Suppose that the marginal cost of producing vitamin D is zero. How much would each firm (Firm 1 and Firm 2) in a colluding duopoly produce ? A) 20 B) 10 C) 35 D) 17.5 TR Price of vitamin D (per ton) Q demanded (tons) $8 35 60 10 75 15 80 20 75 25 60 30 35 35 10. If Firm 1 in the previous question doubles their agreed upon output, then Firm 1 will to and Firm 2 will have total revenue equal to have total revenue equal A) Firm 1 TR- 40; Firm 2 TR-20 B) Firm 1 TR 40; Firm 2 TR-40 C) Firm 1 TR- 30; Firm 2 TR-30 D) Firm 1 TR- 60; Firm 2 TR-0 an 11. If macaroni and cheese is an inferior good, then anin consumer's income will cause the demand curve for macaroni and cheese to shift to the left and the income elasticity of demand is A) decrease; positive 8) increase; negative ) increase; positive D) decrease; negativeExplanation / Answer
9. Ans: 10
Explanation:
When both the firm collude, they behave like a monopoly. Since MC = 0, TR is equal to total profit. From the table it is seen that TR is maximum when they produce 20 tons. Each firm would produce 10 tons.
10. Ans: Firm 1 TR = 40 ; Firm 2 TR = 20
Explanation:
If Frm 1 doubles its production, it will produce 10 + 10 = 20 tons and Firm 2 will continue with production of 10 tons, the total production will be 30 tons. Now the price per ton will decrease to $2.
Firm 1's TR = $2 * 20 = $40
Firm 2's TR = $2 * 10 = $20
11. Ans: increase ; negative
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