Use the Following to Answer Questions

question 196

Multiple Choice

Use the following to answer questions:
Figure: Monopoly Profits in Duopoly
-(Figure: Monopoly Profits in Duopoly) The figure Monopoly Profits in Duopoly shows how an industry consisting of two firms that face identical demand curves (D₁) can collude to increase profits. Which of the following assumptions is NOT a part of the analysis illustrated by the model?

• A) The two firms are identical.
• B) The two firms sell identical products.
• C) While the firms face the same MC curves, their respective TC curves have unequal slopes.
• D) Each firm has a horizontal marginal cost curve.

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Definitions:

Plaster

A mixture of water, lime, or cement, and sand, used to coat walls and ceilings for a smooth or decorative finish.

Labor

Human effort used in the production of goods and services in the economy.

Positive Supply

A situation where the quantity of a good or service available increases as its price increases, indicating a direct relationship between price and quantity supplied.

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Molds used for creating gnome figurines, often employed in crafts, gardening decoration, or as part of a manufacturing process for garden ornaments.