-(Exhibit: Monopoly Through Collusion) Given the Duopoly Industry Illustrated in the Exhibit

question 188

Multiple Choice

-(Exhibit: Monopoly Through Collusion) Given the duopoly industry illustrated in the exhibit, if the two firms colluded to maximize their combined economic profits, the market price they would set would be _______ and combined economic profits of the firms would be _______ .

• A) P₁; given by the area of the rectangle bounded by 0P₁CQ₄
• B) P₁; zero
• C) P₃; given by the area of the rectangle bounded by 0P3AQ₁
• D) P₂; given by the area of the rectangle bounded by P₁P₂BG

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Definitions:

Economic Rent

It is the payment to an owner or factor of production in excess of the costs needed to bring that factor into production. In other words, it's the extra income earned from a resource without investing in additional effort or cost.

Net Productivity

The actual output after subtracting the inputs used in the production process, indicating the efficiency of production.

Capitalization

The total market value of a company's outstanding shares, representing the investment community's perception of its worth.

Recognizing

The act of identifying, acknowledging, or understanding something as being true or valid.