Two Companies Are the Only Snowplow Merchants in a Small

question 43

Multiple Choice

Two companies are the only snowplow merchants in a small town. Inverse market demand curve is P = 100 - 10Q, where Q = q₁ + q₂ (Firm 1's output = q₁; Firm 2's output = q₂) . Each firm has marginal costs of $25. In the Nash equilibrium in this market, the market price is $____.

• A) 50
• B) 60
• C) 25
• D) 40

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Definitions:

Depreciation Expense

An accounting method for allocating the cost of a tangible asset over its useful life, representing the asset's consumption.

Accrual Accounting

An accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash transaction occurs.

Expenses Recorded

The process of documenting all the money spent during the operation of a business, used to track financial performance and for tax purposes.

Cash Paid

The total amount of cash disbursed by a company for various purposes, such as operating expenses, acquisitions, or investments.