There Are Two Firms in the Blastopheme Industry

question 19

Multiple Choice

There are two firms in the blastopheme industry. The demand curve for blastophemes is given by p = 3,000 - 2q. 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 they each produce a total of 750 units.
• B) they produce a total of 500 units, no matter which firm produces them.
• C) and only if each firm produces 300 units in its plant.
• D) they produce a total of 600 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:

Retribution Bias

The tendency to seek punishment for perceived wrongs or injustices, often influenced by emotions rather than rational judgment.

Potency Bias

The tendency to see powerful individuals as more influential or important than they actually are.

Disruptive Sleep

A sleep disorder or disturbance that interrupts the normal sleep pattern.

Nausea

A feeling of sickness with an inclination to vomit, which can be a symptom of various conditions.