Quick Buck and Pushy Sales Produce and Sell Identical Products

question 135

Multiple Choice

Quick Buck and Pushy Sales produce and sell identical products and face zero marginal and average cost. Below is the market demand curve for their product. Suppose Quick Buck and Pushy Sales decide to collude and work together as a monopolist with each firm producing half the quantity demanded by the market at the monopoly price. If Quick Buck cheats by reducing its price to $1 while Pushy Sales continues to comply with the collusive agreement, then Quick Buck's economic profit will be ______.

• A)$6,000
• B)$4,000
• C)$2,000
• D)$3,000

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Definitions:

Chemoreceptors

Sensory cells or organs responsive to chemical stimuli, involved in detecting changes in the chemical composition of the environment or body.

Nociceptor

A sensory receptor that responds to potentially damaging stimuli by sending signals to the spinal cord and brain, which is interpreted as pain.

Substance P

A peptide involved in transmitting pain messages to the brain and is involved in inflammatory processes.

Interneurons

Neurons that transmit signals between sensory and motor neurons, playing a critical role in the central nervous system by integrating sensory input and motor output.