Use the Following to Answer Question

question 201

Multiple Choice

Use the following to answer question:
Figure: Monopoly Profits in Duopoly
-(Figure: Monopoly Profits in Duopoly) Use Figure: Monopoly Profits in Duopoly.Suppose there are two firms in this industry.Each firm faces an identical demand curve,D₁, and the market demand curve is D₂.The figure illustrates how firms can reap monopoly profits,even in an industry with:

• A)free entry and exit.
• B)two firms.
• C)monopolistic competition.
• D)a four-firm concentration ratio of 50.

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Definitions:

Frederic Bastiat

Frederic Bastiat was a 19th-century French economist and writer known for his advocacy of free markets, individual freedoms, and his critiques of socialism.

Balance-Of-Trade Deficit

A situation where a country's imports exceed its exports, leading to a negative balance in trade.

Coal

A fossil fuel used primarily for electricity generation and steel production, composed mostly of carbon.

Import Quotas

Import quotas are government-imposed limits on the quantity or value of goods that can be imported into a country, used to protect domestic industries and regulate international trade.