Table 17-11 Only Two Firms, ABC and XYZ, Sell a Particular Product

question 105

Multiple Choice

Table 17-11
Only two firms, ABC and XYZ, sell a particular product. The table below shows the demand curve for their product. Each firm has the same constant marginal cost of $8 and zero fixed cost.
-Refer to Table 17-11. How much less do each of these firms earn in the Nash equilibrium than if they jointly maximize profits?

• A)$5
• B)$10
• C)$15
• D)$20

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Definitions:

Conforming Goods

Products that meet the specifications and standards outlined in a purchase contract including quality, quantity, and other clearly defined characteristics.

Uniform Commercial Code

A set of laws that provide a standardized and comprehensive framework for the regulation of commercial transactions across the United States.

Cure

A breaching party’s right to provide conforming goods when nonconforming goods were initially delivered; subject to a reasonable time test.

Perfect Tender Rule

A legal principle in commercial law that sellers must deliver goods that exactly meet the terms of the contract without any deviation.