Suppose That Two Firms Are Competing on Price

question 135

Multiple Choice

Suppose that two firms are competing on price. The firms produce identical goods, and the marginal cost of each firm is constant at $15. If one firm is charging a price of $18, the other firm should:

• A) raise its price to $18.01.
• B) charge $17.99.
• C) also charge $18.
• D) cut its output to raise the market price well above $18.

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Definitions:

WAIS

The Wechsler Adult Intelligence Scale is a test created for assessing the intelligence levels of adults and older adolescents.

Stanford-Binet

The widely used American revision (by Terman at Stanford University) of Binet’s original intelligence test.

Intelligence Test Scores

Numerical outcomes derived from assessments designed to measure cognitive abilities, including reasoning, problem-solving, and understanding complex ideas.

Bell-Shaped Pattern

A distribution in statistics that describes how data points are spread across several levels with a peak in the middle; commonly referred to as a normal distribution.