The Accompanying Table Shows a Small Community's Demand for Monthly

question 73

Multiple Choice

The accompanying table shows a small community's demand for monthly subscriptions to a streaming movie service.Assume that only two firms (Nextflix and Flixbuster) sell in this market,that each firm offers the same quality of service and movie selection,and that each firm's marginal cost is constant and equal to 0 (zero) due to excess capacity.Use this information to answer the questions that follow.

-Listed below are four different collusive agreements that Nextflix and Flixbuster are considering.Assuming both firms will abide by the terms,which collusive agreement(s) would maximize total profit in the market? I.Nextflix supplies 400 subscriptions and Flixbuster supplies 500 subscriptions.
II) Nextflix supplies 500 subscriptions and Flixbuster supplies 300 subscriptions.
III) Nextflix supplies 250 subscriptions and Flixbuster supplies 250 subscriptions.
IV) Nextflix supplies 100 subscriptions and Flixbuster supplies 400 subscriptions.

• A)agreement I
• B)agreements I and II
• C)agreements II and III
• D)agreement IV
• E)agreements III and IV

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Definitions:

Household Income

The combined gross income of all members of a household, usually measured annually, that is available for spending or saving.

Poverty Rates

Measures the proportion of the population living below the poverty line, reflecting the general state of economic deprivation in a society.

Great Compression

A period in the mid-20th century where income inequality significantly decreased in the United States, largely due to governmental policies and economic shifts.

Income Inequality

Describes the uneven distribution of income and wealth across different groups in a population, often measured by metrics like the Gini coefficient.