Use the Information Below to Answer the Following Questions

question 97

Multiple Choice

Use the information below to answer the following questions.
Fact 15.2.1
Two firms, FastNet and SmartCast are the only Internet providers in a city. They have identical costs and one firm's service is a perfect substitute for the other firm's service. The industry is a natural duopoly. FastNet and SmartCast decide to collude and agree to share the market equally.
-Refer to Fact 15.2.1. Which of the following actions maximizes the industry's economic profit?

• A)Both firms cheat on the agreement.
• B)One firm cheats and one firm complies.
• C)Both firms comply with the agreement.
• D)New firms enter the market.
• E)Both firms charge the price that would exist in a perfectly competitive market.

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Definitions:

Exchange Rate

The price of one currency in terms of another, determining how much of one currency can be exchanged for another.

British Goods

Products manufactured in or originating from the United Kingdom, known for their quality and heritage.

Demand Curve

A graphical representation showing the relationship between the price of a good or service and the quantity demanded for a given period.

Euros

The legitimate monetary unit for the eurozone, adopted by 19 of the European Union's 27 member countries.