Two Firms, Alpha and Beta, Produce Identical Computer Hard Drives

question 55

Multiple Choice

Two firms, Alpha and Beta, produce identical computer hard drives. They have identical costs, and the hard drives they produce are identical. The industry is a natural duopoly. Alpha and Beta enter into a collusive agreement, according to which they split the market equally. If both firms comply with the agreement,

• A) together they will operate in a way indistinguishable from a monopoly.
• B) the oligopoly will produce more hard drives than a profit- maximising monopoly would produce.
• C) each firm will make zero economic profit.
• D) the price of a hard drive will be equal to marginal cost.

Know the differences between retailing activities and other supply chain activities.

Grasp the considerations involved in choosing retail partners for unique, high-end products.

Recognize the channels used by retailers to sell products and the strategies behind their choices.

Understand the evolution and control shifts in supply chains.

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Definitions:

Bondholder

An investor or entity that owns bonds issued by a corporation or government, holding a claim on the issuer's assets and income.

Unamortized Discount

The portion of a bond's issuance discount that has not yet been amortized or written off over the life of the bond.

Bond Issue

The process by which a government or corporation raises funds by issuing bonds to investors, which are debt securities establishing an obligation to pay back the principal along with interest by a specified date.

Semiannual Interest

Semiannual Interest refers to interest that is calculated and paid twice a year, commonly found in bonds and other types of loans.