A Certain Type of Mushroom Used to Be Produced on 50

question 22

Multiple Choice

A certain type of mushroom used to be produced on 50 farms, each of which had a cost function c(y) = y₂ + 1, where y > 0 and c(0) = 0. The firms operated as competitors. The demand curve for this kind of mushroom is given by D(p) = 52 - p. Marauding deviant Ninja turtles invaded many of the mushroom farms leaving absolute devastation and loathsome slime in their wake. (The turtles had no effect on the cost functions of farms that were not invaded.)

• A) If all of the farms but one were invaded and that farm became a monopolist, total output of mushrooms would fall to half of the preinvasion output.
• B) If all of the farms but one were invaded and that farm became a monopolist, total output of mushrooms would fall toth of the preinvasion output.
• C) If all of the farms but two were invaded and the two undamaged farms became Cournot duopolists, total output of mushrooms would beof the preinvasion output.
• D) If half of the farms were invaded and the industry remained competitive, industry output would fall to half of the preinvasion output.
• E) If half of the farms were invaded and the industry remained competitive, industry output would fall but would be greater than half of the preinvasion output.

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