Use the Following to Answer Questions

question 216

Multiple Choice

Use the following to answer questions:
-(Table: Demand for Crude Oil) Look at the table Demand for Crude Oil. Assume that the crude oil industry is a duopoly and the marginal cost of producing crude oil is zero. If the two firms collude to share the market equally, the price of crude oil will be _____, firm 1 will produce _____ barrels, firm 2 will produce _____ barrels, and each firm will earn revenue equal to _____.

• A) $80; 80; 80; $6,400
• B) $80; 40; 40; $3,200
• C) $60; 50; 50; $3,000
• D) $40; 60; 60; $2,400

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Definitions:

Lower-of-Cost-or-Market

An accounting principle that values inventory at the lower of its historical cost or market value.

Lawnmowers

Mechanical devices or machines used for cutting grass to maintain a desired length or appearance of a lawn.

Snowblowers

Machines designed for removing snow from surfaces, such as driveways and sidewalks, using a rotating auger to collect and eject the snow to the side.

Inventory Turnover

A metric that reveals the number of times a company's inventory is sold and restocked within a certain period.