Use the Following to Answer Questions

question 68

Multiple Choice

Use the following to answer questions:
-(Table: Demand Schedule for Gadgets) Look at the table Demand Schedule for Gadgets. The market for gadgets consists of two producers, Margaret and Ray. Each firm can produce gadgets with no marginal cost or fixed cost. Suppose that these two producers have formed a cartel, agreed to split production of output evenly and are maximizing total industry profits. If Margaret decides to cheat on the agreement and sell 100 more gadgets, Margaret's profit will be _____ and Ray's profit will be _____.

• A) $1,250; $1,250
• B) $500; $500
• C) $1,400; $1,000
• D) $1,000; $1,400

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Definitions:

Probability

Likelihood of occurrence of a particular outcome of an event given all possible outcomes.

Familywise Error

The probability of making one or more false discoveries, or type I errors, when performing multiple hypotheses tests.

Scheffé Test

Statistical procedure used to control familywise error when conducting all possible simple and complex comparisons in a set of data.

Complex Comparisons

Analytical comparisons involving more than two groups.