Use the Following to Answer Questions

question 18

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 and fixed cost of producing crude oil equals zero. Suppose that the two firms are maximizing industry profit and splitting the profit evenly. If firm 1 decides to cheat and increase production by 10 more barrels, it will earn profits of:

• A) $6,400.
• B) $6,300.
• C) $3,500.
• D) $2,800.

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Definitions:

Customer's Location

The geographical position or address of a customer, which can be important in logistics, service provision, and marketing strategies.

One-Time Price Reduction

A temporary reduction in the price of a product or service, offered only once as an incentive.

Trade Discounts

Discounts on the list retail price offered to channel members.

Cash Discounts

are reductions in price offered to buyers as an incentive for early payment of their bills, used to improve cash flow.