Use the Following to Answer Question

question 245

Multiple Choice

Use the following to answer question:
-(Table: Demand Schedule of Gadgets) Use Table: Demand Schedule of 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 quantity effect will be a(n) _____ in profit of _____.

• A)decrease;$250
• B)increase;$150
• C)increase;$400
• D)decrease;$400

Understand the basic principles and violations under the Sherman Act.

Recognize the global application of antitrust laws to U.S.-based firms engaged in international activities.

Identify and evaluate the potential anticompetitive effects of various business agreements and practices, including tying agreements.

Distinguish between different antitrust treatments like per se illegal activities versus rule of reason.

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Definitions:

Weighted Average

A mathematical calculation that takes into account the varying degrees of importance of the numbers in a data set, providing a measure that reflects the relative importance of each value.

Unlevered Cost

The cost of an investment or project without considering the effects of debt financing, focusing solely on equity-financed expenses.

Cost of Debt

The effective rate a company pays on its current debt, incorporating the tax shield benefits of interest payments.

Asset Beta

A measure of the risk of an asset held in isolation, compared to the market as a whole.