Quick Buck and Pushy Sales Produce and Sell Identical Products

question 132

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 and Pushy Sales matches the price cut, then if consumers are evenly split between the two firms, what will be Quick Buck's economic profit?

• A)$1,000
• B)$1,500
• C)$2,000
• D)$3,000

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Definitions:

Live Birth

The process of giving birth to young that have developed inside the body, as opposed to laying eggs.

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A group of embryonic cells found only in vertebrates; develop along the neural tube and migrate to various parts of the embryo where they give rise to (or influence the development of) nerves, head muscles, cranium, jaws, and other structures.

Embryonic Cells

Cells that originate from the embryo and have the potential to develop into any type of body cell, possessing high degrees of plasticity and the ability to proliferate.

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