Use the Following to Answer Question

question 79

Multiple Choice

Use the following to answer question:
Figure: Monopoly Profits in Duopoly
-(Figure: Monopoly Profits in Duopoly) Use Figure: Monopoly Profits in Duopoly.The figure shows how an industry consisting of two firms that face identical demand curves (D₁) can collude to increase profits.The market demand curve is D_2. Which assumption is part of the analysis illustrated by the model?

• A)The two firms have identical marginal cost but different average total cost.
• B)The two firms sell differentiated products.
• C)The MR curve is not relevant to either firm's choices.
• D)The firms can act as a cartel and maximize their combined economic profit.

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Definitions:

Complex Reasoning

The cognitive process involving the analysis, evaluation, and synthesis of information to solve problems or make decisions.

Working Memory Capacity

The amount of information that an individual can hold in mind and manipulate for a short period.

Executive Control System

The set of cognitive processes and mental skills that help an individual plan, monitor, and successfully execute their goals.

Cognitive Abilities

Mental capabilities including reasoning, problem solving, planning, abstract thinking, complex idea comprehension, learning quickly, and learning from experience.