Ann and Bruce Each Own a Pizza Store in Frostbite

question 5

Multiple Choice

Ann and Bruce each own a pizza store in Frostbite Falls, Minnesota. Demand for pizza is given by Q = 200 - 10P. Having the only two pizza stores in Frostbite Falls, they attempt to profitably split the market without violating the Sherman Antitrust Act. Each has the cost function C = 50 + 5Q. If Ann and Bruce behave as duopolists, each earns a profit of

• A) $0.
• B) $200.
• C) $500.
• D) $500
• E) $562.50.

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Definitions:

Ability

The possession of the means or skill to do something.

Benevolence

The quality of being well-meaning; kindness and generosity towards others.

Integrity

The quality of being honest and having strong moral principles, or the state of being whole and undivided.

I-P-O Model

Input-Process-Output Model, a framework used to understand how teams or systems transform inputs into outputs.