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:

Liquids Evaporate

The process by which liquid substances transform into gas, usually as a result of heating or being exposed to air.

Heat Absorbed

The process of taking in thermal energy, often resulting in a temperature rise of the absorbing substance or mass.

Gas Condenses

The process where a gas changes its phase to a liquid when cooled or when pressure is applied.

Under-Pressure

A condition where pressure in a system, such as in hydraulic or pneumatic, is below the desired or required level, potentially affecting performance.