Use the Following to Answer Questions

question 266

Multiple Choice

Use the following to answer questions:
Figure: Monopoly Profits in Duopoly
-(Figure: Monopoly Profits in Duopoly) If the two firms in the figure Monopoly Profits in Duopoly colluded to split production evenly and to maximize their joint profits, the market price they set would be _____, and each firm's economic profit would be _____. (Assume that the market demand curve is D₂.)

• A) P₂; given by the area of the rectangle bounded by P₁P₂EF = FEBG
• B) P₁; P₁P₃AF
• C) P₃; given by the area of the rectangle bounded by 0P₃AQ₁
• D) P₂; given by the area of the rectangle bounded by P₁P₂BG

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Definitions:

Pair Of Equations

Two mathematical equations set equal to each other, often used in solving problems that require finding values for two variables.

Unlimited Driving Plan

A service plan allowing for unrestricted use of a vehicle for a set period of time, often used by car rental companies.

Kilometres

A unit of length in the metric system equal to 1,000 meters, commonly used to measure distances between places.

Harmonized Sales Tax

A combined tax that includes both federal and provincial sales taxes, applied to the purchase of goods and services.