Refer to Figure 17-1. Suppose this market is served by two firms who each face t
ID: 1207800 • Letter: R
Question
Refer to Figure 17-1. Suppose this market is served by two firms who each face the marginal cost curve shown in the diagram. The marginal revenue curve that a monopolist would face in this market is also shown. If the firms are able to collude successfully,
Question options:
the total output will be 2 units and the price will be $8.00 per unit.
the total output will be 4 units and the price will be $6.00 per unit.
the total output will be 2 units and the price will be $6.00 per unit.
there will be no deadweight loss.
. Suppose this market is served by two firms who each face the marginal cost curve shown in the diagram and have zero fixed cost. The marginal revenue curve that a monopolist would face in this market is also shown. If the firms are able to collude successfully, each firm should earn a profit equal to
Question options:
$4.
$6.
$2.
$1.
1)the total output will be 2 units and the price will be $8.00 per unit.
2)the total output will be 4 units and the price will be $6.00 per unit.
3)the total output will be 2 units and the price will be $6.00 per unit.
4)there will be no deadweight loss.
. Suppose this market is served by two firms who each face the marginal cost curve shown in the diagram and have zero fixed cost. The marginal revenue curve that a monopolist would face in this market is also shown. If the firms are able to collude successfully, each firm should earn a profit equal to
Question options:
1)$4.
2)$6.
3)$2.
4)$1.
Explanation / Answer
For First One, A is correct as after collusion the dominant firm will be the driver and sets price where MC= MR.
For second One Profit of both the firm will be=$4=8 x 2 - 6 x 2=$16-$12. The point where MC=MR. Therefore, 1 is Correct
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