There Are Two Firms in the Blastopheme Industry

question 24

Multiple Choice

There are two firms in the blastopheme industry. The demand curve for blastophemes is given by p = 6,600 - 5q. 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 300 units in its plant.
• B) they produce a total of 600 units, no matter which firm produces them.
• C) and only if they each produce a total of 660 units.
• D) they produce a total of 440 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.

---

Definitions:

IFRS

International Financial Reporting Standards, a set of global accounting standards for the preparation of public company financial statements.

International Financial Reporting Standards

A set of accounting standards developed by the International Accounting Standards Board (IASB) that aim to make international financial reporting transparent and comparable.

SME

Refers to small and medium-sized enterprises, which are businesses with a limited number of employees and revenue, playing a significant role in the economy.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that is globally accepted for financial reporting by publicly traded companies.