Two Firms, Alpha and Beta, Produce Identical Computer Hard Drives

question 167

Multiple Choice

Two firms, Alpha and Beta, produce identical computer hard drives. They have identical costs, and the hard drives they produce are identical. The industry is a natural duopoly. Alpha and Beta enter into a collusive agreement, according to which they split the market equally. If both firms comply with the agreement

• A) together they will operate in a way indistinguishable from a monopoly.
• B) the price of a hard drive will be equal to marginal cost.
• C) each firm will make zero economic profit.
• D) the oligopoly will produce more hard drives than a profit-maximizing monopoly would produce.

Recognize the importance of branding in service-dominant logic and co-creation of value.

Comprehend the significance of emotional, functional, and symbolic needs in branding.

Assess the role of authenticity and motivated reasoning in brand perception and consumer decision-making.

Evaluate the importance of visual identity and experience in building brand equity.

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Definitions:

Coordinating Mechanism

Systems and processes that facilitate the efficient allocation and use of resources within an economy or organization.

Command Economy

An economic system in which the government or a central authority controls all major aspects of production and distribution.

Manufacturers Decide

The process by which companies determine what products to produce, how much to produce, and at what price to sell based on market demand and other factors.

Market Economy

An economic system where supply and demand from consumers and businesses drive economic decision-making and the allocation of resources.