Suppose Acme and Mega Produce and Sell Identical Products and Face

question 61

Multiple Choice

Suppose Acme and Mega produce and sell identical products and face zero marginal and average cost. Below is the market demand curve for their product. Suppose Acme and Mega decide to collude and work together as a monopolist with each firm producing half the quantity demanded by the market at the monopoly price. If Mega cheats on the agreement by reducing its price to $1 while Acme continues to comply with the collusive agreement, then Mega will then sell ________ units and Acme will sell ________ units.

• A)150; 50
• B)100; 50
• C)150; 0
• D)100; 0

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Definitions:

Additional Income

Earnings received beyond the regular pay or salary, such as bonuses or overtime pay.

Federal Government Revenues

The income received by the federal government from various sources, such as taxes, fees, and investments.

Individual Income Tax

A tax levied on the income of individuals, including wages, salaries, and investment returns.

Clothing Tax

A specific tax imposed on the sale or purchase of clothing, which can vary by jurisdiction.