Quick Buck and Pushy Sales Produce and Sell Identical Products

question 115

Multiple Choice

Quick Buck and Pushy Sales produce and sell identical products and face zero marginal and average cost. Below is the market demand curve for their product. Suppose Quick Buck and Pushy Sales 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 Quick Buck cheats by reducing its price to $1 while Pushy Sales continues to comply with the collusive agreement, then Quick Buck will sell ________ units and Pushy Sales will sell ________ units.

• A)0; 3,000
• B)3,000; 1,000
• C)2,000; 1,000
• D)3,000; 0

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Definitions:

Fisher's Exact Test

A statistical significance test used for small sample sizes, comparing proportions in a 2x2 contingency table.

Chi-square Statistic

A measure used in statistics to test the independence of two events.

Observed Data

Refers to the data that has been collected or measured directly in an experiment or study.

Calculated

Determined or derived by mathematical methods or processes.