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

question 89

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 comply with the agreement,

• A)together they will produce the monopoly quantity and make the monopoly economic profit.
• B)the price of a hard drive will equal marginal cost.
• C)each firm will make zero economic profit.
• D)the oligopoly will produce more hard drives than a profit-maximizing monopoly would produce.
• E)the oligopoly will produce fewer hard drives than a profit-maximizing monopoly would produce.

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Definitions:

Tax Revenue

Consists of the income that a government gains from taxation, which is used to fund public services and obligations.

Welfare

Government programs that supplement the incomes of the needy.

Price Buyers Pay

The amount of money that consumers are required to pay to acquire a good or service.

Price Sellers Receive

The amount of money that producers get from selling one unit of a good or service, after considering all costs and expenses.