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

---

Definitions:

Scapegoat Theory

A social psychological theory that suggests individuals or groups may be unfairly blamed for problems or issues as a way of deflecting attention from the true causes.

Frustration-Aggression Principle

A theory suggesting that frustration leads to aggressive behavior, as the individual seeks to release or address perceived sources of frustration.

Outgroup Homogeneity

This concept describes the tendency to view members of an outgroup as more similar to each other than members of one's own group, often leading to stereotyping.

Harassment

Harassment entails unwanted behavior or actions directed at an individual or a group, causing distress, intimidation, or a hostile environment.