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

question 36

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 cheat on the agreement so the market is the same as a competitive market,

• A)each firm makes zero economic profit in the long run.
• B)each firm makes the monopoly profit.
• C)the oligopoly will produce fewer hard drives than a profit-maximizing monopoly would produce.
• D)the oligopoly will produce the same number of hard drives as a profit-maximizing monopoly would produce.
• E)each firm incurs an economic loss and exits the market in the long run.

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Definitions:

Contagious

Capable of being transmitted from one individual to another through direct contact or proximity.

Erythroderma

A severe skin condition characterized by widespread redness and scaling that covers most of the body's surface.

Erythema

Redness of the skin or mucous membranes, caused by hyperemia of superficial capillaries.

Excoriation

A skin lesion caused by scratching, abrasion, or rubbing which results in the removal of the superficial layers of the skin.