Use the Following Scenario to Answer the Following Questions

question 24

Multiple Choice

Use the following scenario to answer the following questions:
In 2011,three firms (Firm A,Firm B,and Firm C) were selling cellular phone service for a price of $40 per month in Playa del Carmen,Mexico.Each firm serviced 100 cell phone customers; thus,all firms together serviced a total of 300 customers.Assume marginal cost is $0 (zero) for all firms and thus total revenue is equal to total profit.In 2012,Firms A and B each continued to service 100 customers,but Firm C now serviced 150 customers; thus,all firms together serviced a total of 350 customers.All firms now charge $30 per month.
-Firm C's monthly profit increased by ________ due only to the output effect and decreased by ________ due only to the price effect,for a net increase of $500.

• A) $2,500; $2,000
• B) $3,000; $2,500
• C) $500; $0
• D) $1,500; $1,000
• E) $3,500; $3,000

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Definitions:

Transporting Passengers

The act of moving individuals from one location to another, typically as a service offered by vehicles such as buses, trains, airplanes, and taxis.

Nonliability

A condition or status where an individual or entity is not held legally responsible for certain actions or outcomes.

Affirmative Action

Affirmative action refers to policies that take race, color, religion, sex, or national origin into consideration in order to benefit an underrepresented group in areas of employment, education, and business.

Moral Blame

Attribution of ethical responsibility or wrongdoing to an individual or group.