Suppose Acme and Mega Produce and Sell Identical Product with Zero

question 6

Multiple Choice

Suppose Acme and Mega produce and sell identical product with zero marginal and average cost.Following is the market demand and marginal revenue curves for the product.
Refer to the figure above.Suppose Mega and Acme have colluded to work as a pure monopolist,but Mega cheats on Acme and reduces its price to $1.00 each.How much profit will Mega earn?

• A) $75
• B) $100
• C) $150
• D) $200

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Definitions:

Disinflation

A reduction in the rate of inflation; a slowdown in the rate at which prices increase.

Hyperinflation

A significantly rising inflation rate that accelerates quickly, leading to a swift decrease in the value of currency.

Variety

The range of different items, products, or choices available within a category or market.

Double Coincidence

A term from economics referring to the situation where two parties each hold an item the other wants, enabling an exchange without the need for money.