Consider an Industry with Two Firms Producing Similar Products

question 19

Multiple Choice

Consider an industry with two firms producing similar products.
Mega Corp's total costs are TC = $5,000 + 100 × Quantity.
Big Inc's total costs are TC = $4,000 + 200 × Quantity.
Refer to the information given above.If each firm starts out producing 15 units you would expect that:

• A)both firms will continue producing 15 units.
• B)Big Inc will be able to charge a lower price than Mega Corp and will produce more than 15 units.
• C)Mega Corp will be able to charge a lower price than Big Inc and will produce more than 15 units.
• D)Both Mega Corp and Big Inc will reduce the quantities produced and charge higher prices.

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Definitions:

Ethylpropylamine

A chemical compound which is an amine derivative from ethyl and propyl groups.

Compound

A compound created by the chemical combination of two or more elements bonded together.

Boiling Point

The boiling point is the temperature at which a liquid turns into a vapor at a given pressure, characteristic for each substance.

Pure Solvent

A liquid substance that is able to dissolve other substances (solute), without any impurities or admixtures.