Use the Following to Answer Questions

question 279

Multiple Choice

Use the following to answer questions:
-(Table: Demand for Solar Water Heaters) Look at the table Demand for Solar Water Heaters. The marginal cost of producing solar water heaters is zero, and only two firms, Rheem and Calefi, produce them. Suppose they agree to produce only 25 water heaters each. By how much does Rheem's profit rise if it cheats on the agreement and produces 30 water heaters?

• A) $3,000
• B) $2,700
• C) $2,000
• D) $5,000

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Definitions:

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated as the sum of beginning inventory plus purchases minus cost of goods sold.