There Are Two Firms in the Blastopheme Industry

question 2

Multiple Choice

There are two firms in the blastopheme industry. The demand curve for blastophemes is given by p = 4,500 - 4q. Each firm has one manufacturing plant and each firm i has a cost function C(q_i) = q²_i, where q_i is the output of firm i. The two firms form a cartel and arrange to split total industry profits equally. Under this cartel arrangement, they will maximize joint profits if

• A) and only if each firm produces 250 units in its plant.
• B) they produce a total of 500 units, no matter which firm produces them.
• C) and only if they each produce a total of 562.50 units.
• D) they produce a total of 375 units, no matter which firm produces them.
• E) they shut down one of the two plants, having the other operate as a monopoly and splitting the profits.

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Definitions:

Extend

To straighten or spread out a body part or limb away from the body.

Synchondrosis

Synchondrosis is a type of joint in which the bones are connected by hyaline cartilage, allowing for little or no movement, typically found in the growth areas of children.

Synostosis

The fusion of two or more bones into a single bone, which can occur naturally during aging or as a result of pathological or surgical processes.

Gomphosis

A type of fibrous joint where a peg-like structure fits into a socket, such as the connection between teeth and jawbone.