There Are Only Two Firms in an Industry with Demand

question 104

Multiple Choice

There are only two firms in an industry with demand curves q₁ = 30 - P and q₂ = 30 - P.Both have no fixed costs and each has a marginal cost of 10 per unit produced.If they behave as profit-maximizing price takers,each produces 20 units and sells them at a price of 10 so that each firm makes zero economic profits.If they formed a cartel,the profit-maximizing price is

• A) 10.
• B) 15.
• C) 20.
• D) 25.

Grasp the implications of the shelf prospectus system for corporate securities issuance.

Comprehend the profitability and strategic reasoning behind bond refunding decisions.

Identify the qualifications for issuing new stock under short-form prospectus distribution.

Understand the financial and strategic motives behind going private through a leveraged buyout.

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Definitions:

Marginal Revenue

The increase in revenue that results from selling one additional unit of a product or service.

Marginal Revenue

The added income a company secures by disposing of an additional unit of a good or service.

Demand Curve

A graphical representation that shows the relationship between the price of a good or service and the quantity demanded by consumers.

Profit

The financial gain received when the revenue from selling goods or services exceeds the cost of producing these goods or services.