Suppose That Two Firms, a and B, Collude to Share

question 48

Multiple Choice

Suppose that two firms, A and B, collude to share maximum profits.If the average cost curve for firm A is higher than the average cost curve for firm B at every output, then

• A)firm A should produce nothing.
• B)firm A should produce output as long as its marginal cost is less than firm B's.
• C)both firms should produce where their marginal costs are equal to some number that exceed marginal revenue.
• D)both firms should produce where their marginal costs are precisely equal to marginal revenue.
• E)optimal output cannot be determined from the information provided.

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Definitions:

Return on Investment

A measure of the profitability of an investment, calculated by dividing the net profit from the investment by the cost of the investment.

Lead Indicators

Metrics that precede an event and can be used to predict future trends or performance outcomes.

Net Book Value

The value of an asset after accounting for depreciation or amortization, representing its current worth on the balance sheet.

Investment Centres

Units or divisions within a company that are responsible for making investment decisions and are evaluated based on their return on investments.