Use the Following to Answer Questions

question 96

Multiple Choice

Use the following to answer questions :
Figure: Monopoly Profits in Duopoly
-(Figure: Monopoly Profits in Duopoly) Use Figure: Monopoly Profits in Duopoly.Firms in the duopoly industry illustrated in the figure have zero fixed costs.The market demand curve is D₂.If the two firms colluded to maximize their combined economic profits,they would set the market price at _____,and combined economic profits of the firms would be _____.

• A) P₁;given by the area of the rectangle 0P₁CQ₄
• B) P₁;zero
• C) P₃;given by the area of the rectangle 0P₃AQ₁
• D) P₂;given by the area of the rectangle P₁P₂BG

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Definitions:

Net Income

The total earnings of a company after subtracting all expenses, taxes, and costs from its total revenue.

Net Cash Flow

The difference between a company's cash inflows and outflows over a specific period, indicating its ability to generate cash.

Differential Revenue

The amount of increase or decrease in revenue expected from a particular course of action as compared with an alternative.

Differential Cost

The amount of increase or decrease in cost expected from a particular course of action compared with an alternative.